One of the first steps in the home-buying process is determining your buying power. If you're like 93% of home buyers, this means figuring out how much you can afford for a down payment and the amount you can finance in a mortgage (The National Association of Realtors® 2003 Profile of Homebuyers and Sellers).
Why do this upfront? Knowing what you can afford and selecting the best financing in advance not only saves you time, but allows you to submit a strong, competitive offer when you find the home of your dreams.
A lender will consider your income, debt and credit history when qualifying you for a loan. Monthly mortgage payments include the principal and interest on the mortgage loan, property taxes and homeowners' insurance premium. This is often referred to as "P.I.T.I." Additionally, you may need to include mortgage insurance and homeowner association fees in your monthly payment.