mortgage

5 tips for first-time homebuyers

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Qualify yourself
Qualify yourself | Jan Faukner/Shutterstock.com

Qualify yourself

Ideally, you already know how much you can afford to spend before the mortgage lender tells you how much you qualify for. Bankrate's "How much house can I afford?" calculator will help.

By calculating debt-to-income ratio and factoring in a down payment, you will have a good idea of what you can afford, both upfront and monthly.

Though there's not a fixed debt-to-income ratio that lenders require, the standard dictates that no more than 28 percent of your gross monthly income be devoted to housing costs. This percentage is called the front-end ratio.

The back-end ratio shows what portion of income covers all monthly debt obligations. Lenders prefer the back-end ratio to be 36 percent or less, but some borrowers get approved with back-end ratios of 45 percent or higher.

RATE SEARCH: Now that you know how much you can afford, check out Bankrate's mortgage rate comparison-shopping tool today.

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