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Mortgage Basics: How Much House Can You Afford?

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How much house can you afford? There are many things that factor into how much money you may be able to borrow, like your income, credit, size of down payment, as well as employment and residence history.

 

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A house is displayed. The house morphs into puzzle pieces that show factors. Various houses pop onto the screen.

 

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But knowing how much property you can afford often depends on more than just the amount you may be able to borrow.

 

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Two houses are placed on either side of a scale and are weighed.

 

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It's also helpful to consider three areas of cost when you are deciding if a house is right for you.

 

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A check, a key, and a toolbox are displayed.

 

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First, upfront costs, these costs show up before you start making mortgage payments and can include an earnest money check, which is a deposit that is paid upon making the initial offer.

 

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One hand gives another hand a check.

 

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Another cost is the down payment, which is made at the time of closing.

 

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A woman hands her check to a man.

 

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Paying a higher down payment may help in the long run by decreasing your monthly mortgage payment amount and potentially your interest rate.

 

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Bar graphs with houses on top of them raise and lower.

 

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Second, closing costs, these typically range from 2% to 4% of your total loan amount and could, if required, include a combination of mortgage application fees if applicable, inspections and survey fees, title insurance, recording fees, and a possible escrow deposit.

 

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A key appears. A hand punches numbers on a calculator as the costs are inputted.

 

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But don't be intimidated by the list of closing costs. They're estimated by your mortgage lender up front. And you may be able to negotiate to have some of these costs paid for by the seller.

 

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A hand places a document on the screen, and another hand stamps the document with the word “PAID”.

 

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Third, there's the ongoing costs of owning a home. This not only includes your monthly mortgage payment. It also includes ongoing ownership expenses, things like mortgage insurance, homeowners insurance, property taxes, monthly utilities, or home repairs. So it's important to consider all potential future expenses up front when buying a home.

 

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A hand reaches into a toolbox. A hammer pounds on the ground and a house appears. The house expands and a car drives up next to it as a “SOLD” sign id displayed.

 

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By considering these three areas of costs and working with a mortgage loan officer, you can better determine how much house you may be able to afford.

 

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A check, a key, and a toolbox are shown.

 

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To start thinking through your options, US Bank's home affordability calculator can help make the path to home-ownership easier to manage, giving you peace of mind.

 

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A woman looks at a computer screen. Logo, US Bank. Equal Housing Lender disclaimer messaging.

Mortgage basics: How much house can you afford?

Knowing how much house you can afford often depends on more than just the amount you can borrow. As you prepare for the home buying season, we're here to help with information at your fingertips. 

Tags: Credit, Home, Prequalification, Home buying, Mortgage, Loans, COVID-19
Published: April 14, 2020

There are many things that factor into how much money you may be able to borrow, like your income, credit, size of down payment, as well as employment and residence history. But knowing how much property you can afford often depends on more than just the amount you may be able to borrow. Learn more about the factors that determine how much house you may be able to afford.

Ready to start thinking through your options? U.S. Bank’s home affordability calculator can help make the path to homeownership easier to manage. 

 

Have questions about the current market amid COVID-19, we're here to help. Reach out to a mortgage loan officer to discuss your situation. 

 

COVID-19 resources at your fingertips. If you have questions about how to navigate your finances during COVID-19, we’re here to help. Click here to learn more about how you can safely bank via your mobile device, online, by phone or in-person at a branch.

 

Mortgage and Home Equity products are offered by U.S. Bank National Association. Loan products are offered by U.S. Bank National Association and subject to normal credit approval.