How to Afford a Mortgage on Your Budget

Owning your own home is a key part of the American dream. But if you've never owned your own home before, you may not know how to get started.

Just because you're currently renting doesn't mean home ownership is that far out of reach. If you're wondering whether you can afford a mortgage on your budget, you may be surprised to find the answer is a resounding “yes!" Here's how.

Costs of home ownership

Being able to afford rent is a good indicator that you might be able to afford a mortgage. But there is more to affording a house than just the monthly payment on your loan. The following expenses are also part of home ownership, and in many cases these costs are factored in to your monthly mortgage payment to your lender:

• Property taxes
• Homeowners insurance
• Interest on your mortgage loan
• Private mortgage insurance (PMI)

Once you're a homeowner, you'll also be responsible for home maintenance and repairs. Although you probably won't have major repairs every year, you will have some repairs from time to time. A good way to budget for them is to save between 1% and 2% of your home's value each year in an emergency fund specifically for maintenance and repairs.

How much can you afford?

Try using a mortgage calculator to find out how much house you can buy. You just need to know which numbers to plug in. Once you determine how much you can afford to pay each month on a mortgage loan, what your interest rate will be, the mortgage period you want (30 years is standard), and your down payment, the Synovus mortgage calculator will tell you what price home you can afford.

Getting yourself financially ready

When you are getting ready to apply for a mortgage, make yourself an attractive candidate by getting your finances in order. Specifically, you'll need some money saved up for a down payment and closing costs, a debt-to-income ratio of 43% or below, and a credit score of 580 or higher.1 The better your financial picture, the more likely it will be that a lender will prequalify you for a mortgage and at a lower interest rate.

We understand that there can be barriers to homeownership for people who don't think they have a sufficient income or who lack the knowledge about how to buy a home. So we offer mortgage loan products to facilitate homeownership for all people. Two products to consider are Federal Housing Administration (FHA) loans and U.S. Department of Veterans Affairs (VA) loans.