The time has come to buy a house. Questions buzz around in your head like a swarm of angry bees: "How much can I borrow? How much do I have to put down? How much will my payments be?" Well, let me suggest starting with the "How much can I borrow?" question. I know you should never answer a question with a question, but in this case we need to ask a few more questions in order to figure out the answer to our first question, and for those of you who would like to start crunching numbers right away, try out these helpful mortgag e calculators.

There are many factors you need to take into consideration when purchasing a home. First and foremost, ask yourself what size monthly payment you can afford. When determining how large a mortgage you can afford, take into consideration all your current expenses such as car payments, credit card bills, student loans, utilities, and the like. You may also want to factor in how much you spend on things like entertainment, eating out, and traveling.

When deciding on a comfortable monthly payment, consider making a down payment in order to decrease your mortgage payment. A down payment can be cash on hand. You can also use a cash gift from relatives or equity from the sale of a previous home. There are many other down payment options out there--your pension or deferred compensation plan, for example--but I can't go into all of them. I'll save that for another article.

At the present time, most lenders will allow for a whopping debt-to-income ratio of 45% - 50%. Your debt-to-income ratio is the sum of your mortgage payment and any other credit card or loan payments, divided by your monthly gross income. Lenders use this ratio to help determine your credit worthiness. So, all of your revolving debts along with your mortgage payment divided by your monthly gross income should not exceed the 36% - 45% debt-to-income ratio. So, here's a quick little formula to help you figure out how much you can afford to put toward you monthly house payment:

--Multiply your gross monthly income by 0.45

--Subtract your non-mortgage debt payments from the result

--What's left is your allowable mortgage payment



So, if we have a couple with a combined monthly gross income of $5000 and they pay $700 a month toward two auto loans and one credit card, they would qualify for a monthly payment of $1550. Also, be aware that not all of your monthly housing payment goes toward your principal and interest. A portion must go toward homeowner's insurance and property taxes. I mention this because on most mortgage calculators that'll you use, you'll need to enter these figures to get an accurate idea of what your real monthly mortgage payment will look like.

Property taxes are typically a percentage of your home's assessed value. To calculate property taxes, local jurisdictions generally multiply the tax rate by a home's assessed value. For example, if you pay 0.5% in property taxes of the assessed value, a home assessed at $250,000 would have a yearly property tax bill of $1,250. In order to find out the tax rate, you will need to contact your county tax assessor or a local mortgage broker or bank will be more than happy to help. As for the homeowner's insurance, your best bet is talking to a local broker or bank to get a general idea of what it is for your area. Mortgage calculators will ask you for a percentage rate sometimes and others will ask for a yearly figure. It can be confusing.

Figuring out how much you can afford to put toward your monthly house payment is a start. Now, you want to know how much house you can afford. There are mortgage calculators galore that will help you do this, but, as I mentioned above, they will require you to enter real estate taxes, homeowner's insurance, and interest rates. Some calculators will provide you with figures, but they aren't necessarily correct, so I would suggest a little leg work. Once you know how much you can comfortably spend a month toward a home, and you've gathered your tax and insurance rates, you only need an idea of what kind of interest rate you'll get. Oh, did I forget to mention that you can call a lender or mortgage broker to get pre-qualified as well, and they usually don't charge anything? If you're curious, try out some mortgag e calculators. Once you have a good idea of what you think you can afford, call a local lender or broker and get pre-qualified to see if you're in the ballpark, and soon you'll be on your way to owning a home.

About the author:

Brian Daniel is a loan officer/marketing coordinator for Bend Mortgage Group Ltd. a mortgage company in Bend, Oregon. For more information or help with a Bend, Oregon home loan visit www.bendmortgagegroup.com.