Home Loans In McAllen, Texas

Welcome to Capital Home Mortgage McAllen. McAllen is the largest city in Hidalgo County and the 21st-most populous city in Texas. Located along the southern tip of the Rio Grande Valley, the cost of living, growth, affordability and amenities make it a top alternative in the US among many first-time homebuyers for its appealing real estate scene. 

It’s easy to get wrapped up in the excitement of buying a new home. But while this is a huge milestone that deserves to be celebrated, it is crucial to be realistic about what you can afford, especially in today’s competitive real estate market.

The first thing you need to do when buying a home is to set a budget. You don’t want to waste time and energy looking at houses only to find out you can afford them. 

How Much Can I Afford To Spend On A Home?

The amount of a mortgage you are eligible for determines how much debt a lender believes you can take on. But there are ways to determine how much you can afford even before speaking with a lender.

Home Mortgage Calculator

Mortgage calculators give you an idea of the price of the property you can afford based on your current financial status or how much cash you need for your down payment and closing costs of the home you wish to purchase.

Using a mortgage calculator is a straightforward process. You must enter the required details such as location, income, total debts, and down payment amount. The calculator will take all this information to provide you with an estimate of the loan size you’re likely to get approved for.

The 36/45 Rule

Lenders use your debt-to-income ratio to determine how much additional debt a borrower can take. If debt payments already take up a large chunk of your salary, you may be denied a mortgage or required to put in a higher down payment.

According to the 36/45 rule, your housing expenses (monthly home loan payments, homeowner’s insurance. and any applicable real estate taxes) should not exceed 36 percent of your gross monthly income. Moreover, the sum of all your debts (mortgage payments, car payments, student loans, credit cards, and other lines of credit) should be at most 45 percent of your gross monthly income. 

Some lenders allow for a higher housing expense and DTI ratio for government-guaranteed and certain conventional loans, but this usually means higher down payment and interest rates.

Other Factors Affecting The Amount Of Your Mortgage

DTI and housing expense ratios significantly affect the mortgage qualification process. Still, your monthly mortgage payments and the amount you can afford are also affected by other factors.

Here are some other factors to keep in mind before deciding to purchase a new home:

     1. Size Of Down Payment

There’s a misconception that you must put down 20% of the buying price as a down payment for a home. The truth is;  it’s possible to obtain a mortgage with as low as a 3 percent down payment for conventional loans guaranteed by Freddie Mac or Fannie Mae.

However, a low down payment usually means higher interest rates and monthly payments. You will also have to pay for PMI or private mortgage insurance if you put down less than 20 percent. These additional expenses will cost you tens of thousands of dollars over the loan term.

     2. Term Of Mortgage

The mortgage term is the amount of time you have to pay back the money you borrowed from the bank or lender. Loan terms of 15 and 30 years are the most common; however, other options are available.

After you close your home loan, your mortgage payments will likely be an enormous debt you’ll have to pay each month. Longer mortgage terms may mean lower monthly payments, but you will pay more by the end of your loan.

     3. Type Of Interest Rate

Mortgage rates are determined by your lender, depending on your credit score and other factors. They can either be a fixed rate or an adjustable-rate mortgage, which means they can stay the same over the life of the loan or change according to the state of the market.

Even a slight difference in interest rates could mean hundreds or even thousands of dollars difference in interest paid over the life of the loan. 

McAllen, Texas Mortgage Lender

Homebuyers must shop and compare lenders because while loan requirements are the same, interest rates can vary from one mortgage lender to another.

Are you planning to buy a home in McAllen, TX? Go no further than Capital Home Mortgage.

As one of the leading mortgage lenders in Texas,  Capital Home Mortgage has an underwriting policy that can be customized to meet the needs of each borrower. We pride ourselves on offering excellent customer service, competitive interest rates, and fees for on-time closings. Whether you’re looking to buy your first home or an investment residential property, we can make it happen for you!

Your Best Choice For Texas Home Loans

Capital Home Mortgage has the unique advantage and resources to make your homeownership dreams come true. 

As a direct mortgage lender in McAllen, TX, we control the mortgage process from beginning to end. From loan applications and approval to underwriting and funding, we can help you expedite the whole thing so that you can move into your new home sooner.

If you want to learn more about our services or mortgage options, call us at 956-307-3422 or use the contact information on this page.