How Much Mortgage Can You Really Afford for a Santa Cruz Home?

Posted by Lauren Spencer on Tuesday, November 26th, 2013 at 1:54pm.

Owning a Santa Cruz home can be a sign of independence and success. It allows you to build up equity and the mortgage interest and property taxes are tax-deductible. Can you afford it, though?

Reputable lenders look at a list of criteria to decide how much they’ll loan you. This list includes:
       • Credit score
       • Existing assets including cash
       • Car leases or loans
       • Credit card balances
       • Debt consolidation loans
       • Home equity loans
       • Installment loans
       • Student loans
       • Other monthly debts
       • Size/source of your down payment

If you’d like to get an idea of what you can afford before talking to a lender, here are a few tools you can use to decide whether a Santa Cruz home is within your budget:

• As a rule of thumb, your house hunting budget shouldn’t be more than 2.5 times your pre-tax annual income. If you earn $50,000 a year, your budget for house hunting should be around $125,000.

• Your Housing Expense Ratio, which is principal, interest, taxes and insurance (PITI) shouldn’t be more than 25% to 28% of your pre-tax monthly income.

• You're Debt-to-Income Ratio should be no more than 36% of your pre-tax monthly income. This is the ratio between how much you owe and how much you earn.

• Use an online calculator to figure how much home you can afford.

“Qualifying for” and “can afford” are two different things. Shopping for a Santa Cruz home within your budget will save you a lot of heartache now and in the future.

If you'd like help determining how much mortgage you can really afford, I can help. 

For more information about buying and selling a Santa Cruz home, email me at or give me a call at 831.662.6522.

For additional real estate information, please visit my home page at

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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