What Can I Afford?

There are several ways to go about this step.  You can:

A. Go straight to a lender and ask.  They will tell you what you can borrow.  Trouble is this may be more than you are comfortable with.  The pro’s with this method is they will be able to take into account your credit score.  They may also have some advice on how you can better your score by cleaning up your report or making some changes in who you owe what.

B. Use a mortgage calculator like the one in the sidebar or here.  This will provide you with a number and if you have decent credit it would probably be enough to get a good idea.

C.  Learn what the calculator is doing by looking at all the variables and how they relate to one another here.  This is the way I like to do it.  Learning your financial picture is the first step.  An in depth analysis will help you learn where your money goes and if more of it could be available for a new home, saving, or investing.