Income vs Debt When Buying a House

Series Summary

Buying a first home is a major milestone in the life of a twentysomething college graduate or a newly engaged couple. It’s one of those things you get excited about and look forward to for years, hoping that in six months, if reasonable interest rates and a healthy housing market hold, it will be the perfect time to start scouting for that perfect little fixer upper in a middle class neighborhood, preferably with good schools nearby, a local park, an active community, and no registered sex offenders for at least two miles.

But aside from the aesthetic and practical concerns associated with purchasing a home, there is a large financial quality to the process that often gets overlooked or underemphasized. A house is one of the largest financial investments you will make over the course of your life, and having your ducks in a row, so to speak, would be wise before you accept responsibility for a 15 to 30 year mortgage loan.

In these free video clips with advice for potential homeowners, learn about some of the steps, and some of the potential risk, involved in buying a new home. Our expert will walk you through the process with tips on how to look at your credit score and perform credit repair, what to expect to pay for taxes, insurance and PMI, and how to make a down payment or get assistance. He’ll also explain how to analyze your finances, including debts and annual income, to determine how much house you can afford.

Go into the home buying process well informed and well equipped to make the right decision for yourself, your family, and your budget.

Video Transcript

"Hello, my name is Brett Staggs, and on behalf of Expert Village, I'm going to be telling you how much you can afford, for a first time home buyer. When applying for your first home loan, and you're trying to figure out how much you can actually afford, the first thing you want to look at is your income, versus your debts. Your income, obviously is the most important part. You take that, versus your debts and the difference between the two, is the number your going to want to start using for calculating how much house I can actually afford, and how much house I can get qualified for. Now, the difference between these two are going to have some more bites taken out of them obviously with other expenses you have per month. But this is the first step in finding out what you're dealing with as far as income and how much house that can dictate you to qualifying for on your first home loan."