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Man packing up his home

On the Path to Homeownership: How Much Can You Afford?

There’s nothing quite like imagining your dream home—the perfect layout, a spacious yard, a cozy living area. But the journey from dreaming to reality often includes coming (at least part way) back down to earth as you face the realities of financial considerations. Here are four key steps to consider as you move down the path from dreaming to owning.

Step 1: Evaluate Your Budget

An essential starting point in your homeownership journey involves budget assessment. The standard recommendation is that your mortgage payment shouldn’t be more than 28% of your monthly take-home pay. You’ll also want to take other regular expenses into account, such as utilities, child care, insurance, etc. It’s all about finding that balance between your dream home and a mortgage payment that fits comfortably within your financial means.

Step 2: Consider Your Debts

You might have heard of the 43% debt-to-income ratio rule. While this rule is still a good benchmark for assessing your debt, many lenders prefer a debt-to-income ratio in the neighborhood of 36%. Having a debt-to-income ratio of 36% means your combined monthly mortgage payment, car loan, and credit card bills should not exceed 36% of your gross annual income. This helps ensure you can manage your ongoing expenses alongside the additional financial commitment of your new home.

Step 3: Calculate Your Down Payment

The sum you can afford for a down payment significantly influences your monthly mortgage payments—the larger the down payment, the lower your payments. Use this affordability calculator to help you navigate this process, allowing you to visualize how varying down payments can impact your monthly budget.

Step 4: Research Ways to Save

Maximizing your savings is just as important as calculating your expenditures. We’re committed to helping members make smart financial decisions—which is why we’ve partnered with HomeAdvantage®. HomeAdvantage features a collection of free house-hunting tools that make it easy to search for homes, find an agent online, and much more. And when you work with an agent in the HomeAdvantage network, you qualify for Cash Rewards* equal to 20% of your agent’s commission. Calculate your potential Cash Rewards.

With these steps in mind, the path to owning a home can be both enjoyable and financially responsible. Making informed decisions along the way can turn your dream of homeownership into a comfortable, sustainable reality.

What’s Your Next Step?

A great way to get help with any of the steps to homeownership mentioned above is to schedule a free Homebuyer Planning Session. Have a casual, no-pressure sit-down with a Salal Mortgage Advisor and learn what to expect, what you can afford, how much you’ll need to put down, and what your future mortgage payments might look like.

If you have any questions or would like to get more info about the home loans we offer, you can always reach out at HomeLending@SalalCU.org or 800.562.5515 ext. 1288 (M–F, 9:30 a.m.–5:30 p.m. PT).

All Salal loans are subject to credit approval. Property must be located within CA, ID, NV, OR, UT, or WA. Some restrictions may apply.
*The HomeAdvantage program is made available to members through a relationship between Salal Credit Union and HomeAdvantage. Cash Rewards are awarded through the HomeAdvantage program to buyers and sellers who select and use a real estate agent in the HomeAdvantage network. Home buyers or sellers are not eligible for Cash Rewards if they use an agent outside this network. Cash Rewards amounts are dependent on the commissions paid to the HomeAdvantage network agent. Obtaining a mortgage or use of any specific lending institution is not a requirement to earn Cash Rewards. If you are obtaining a mortgage, Salal Credit Union may have specific rules on how Cash Rewards can be paid out. Cash Rewards are available in most states; however, are void where prohibited by law or by Salal Credit Union. Please consult with your Salal Credit Union Mortgage Advisor for details that may affect you.