Many experts recommend that your mortgage payment (including home insurance, property taxes, and any mortgage insurance) be 28% or less of your gross monthly income. For example, if your annual household income is $120,000, your gross monthly income would be $10,000. Therefore, you’d want to keep your monthly mortgage payment to $2,800 or less.
Generally speaking, these five factors play a major role in determining whether you qualify for a home loan, how much you can borrow, and at what interest rate:
- Debt-to-income ratio
- Credit history and credit score
- Employment history
- Down payment
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