Once you've decided to purchase a home, the next step is to decide how much you can afford and how much you choose to spend. Buyers may consult with their tax / investment advisor or C.P.A. on this issue.

Unless an offer is "All Cash", having a letter of "Pre-Qualificaion" or better yet, "Pre-Approval" is essential to have an offer considered seriously.

Three main criteria:

  1. Income and debt. This will determine how much a buyer can afford per month for Principle, Interest, Taxes, Insurance (PITI).
  2. Total cash for a down payment and closing costs.
  3. Credit history.

Lender Ratios:

  • Loan-To-Value (or LTV): This represents the loan as a percentage of the purchase price. If you are purchasing a property for $1,000,000 and you get a loan for $800,000, then you have a LTV of 80%. The higher the LTV, the more difficult it is to obtain the loan because your lender will place tighter restrictions on the three factors listed above.
  • Housing Ratio: This represents your total housing expenses, Principle, Interest, Taxes, Insurance (PITI), divided by your gross monthly income. Lenders will request proof of your income through various documents.
  • Debt Ratio: This represents your total monthly obligations for your property, PITI, plus your monthly payments on your debt. Debt includes for example, student loans, auto loans, alimony/child support.

I encourage buyers to get multiple quotes to secure the best terms & rates Look for someone who is well qualified and you can trust. I have several lenders and mortgage brokers to recommend.

Contact Information

Photo of Ken J. Gendemann Real Estate
Ken J. Gendemann
Pacific Union International
1699 Van Ness Avenue
San Francisco CA 94109
Cell: (415) 828-4063

Ken J. Gendemann, CPA
Pacific Union & Christie's International Real Estate
1699 Van Ness Avenue, San Francisco, CA 94109

Cell: 415-828-4063, Office: 415-345-3083
 License #: 01884446