6002 - When you read or hear about the calculation of monthly payments to buy a home, most times, the writer is using a 30-year, fixed-rate mortgage program to arrive at the payment amount. It's the most utilized program out there, thus, you'll see it used consistently. The buying power affordability process starts something like this: The mortgage professional will go through your monthly financials, starting with your income. Then he or she will go down your monthly installment payments on debt -- car loan, credit cards, student loans and any other mortgage or financed debt (not utilities, food or gas expenses, etc. -- unless, of course, you're paying for those items on a credit card). Once he tabulates these numbers, he'll come up with a ratio -- how much monthly payment dollar against the level of income dollar. If you make $5,000 per month and your debt is $1,500, you would have a debt ratio of 30 percent (meaning 30 percent of your income goes toward monthly debt expenses). Most loan programs will allow your monthly debt for a house to be 28 percent. When you add up all the other monthly payments, that ratio can rise to 36 percent without affecting your ability to borrow money. Read this Nemmar Real Estate Training article at Mortgage Loans, Finance, Economy, Appraisal