Finding the right price point and financing are two crucial elements of the home buying process.

You’ll find that there is far less stress when shopping for your home if you know how much home you can afford. When you and your agent know your price range, you have a real advantage in the market place over those buyers who are trying to find the home they want before they find out if they can afford it.

A buyer who already has talked with a lender and has a letter of loan approval, or a letter stating that the buyer is pre-qualified for a certain price range, gains the confidence of most sellers. That buyer’s offer has a better chance of being accepted.

Interest rates can increase or reduce a buyer’s purchasing power. The same amount of money can cost more or less to borrow, depending upon the interest rate. That’s why the amount of house you can afford is determined by a combination of factors, including your income, debt and credit, the terms and conditions of various loan products, and your needs and preferences.

Using the worksheet below, you can obtain a general understanding of the method a lender will use to arrive at your appropriate price range. This worksheet cannot possibly show all the different home loans that are available currently. Your lender will guide you through an analysis of various loan products, helping you to select the one that is best for you.

For a worksheet that will give you an idea of the questions a lender will ask, click on the link below.

Mortgage Qualification Calculator