How Much House Can You Really Afford?

illustration of red checkmarks and a isometric house

From house hunting to financing, first-time homebuyers often have many questions about navigating the road to homeownership. It’s an undertaking that can seem even more overwhelming when moving to a farm, acreage or rural community.

These five tips from our Rural 1st® team can help you successfully finance a country home that fits both your lifestyle and budget.

Start the conversation early. Before falling in love with a property or home in the country, would-be buyers should evaluate their financial situation and explore mortgage options with a lender. Sticking to a house budget is easier when a lender is involved early and providing guidance on what a borrower can afford.

Gather up-to-date financial records. Minimum documentation for a loan application can include W-2s, tax returns and pay stubs, as well as personal and / or business balance sheets.

It’s important for homebuyers to account for all assets and liabilities when preparing their balance sheet. Listing liabilities is generally the easy part; applicants tend to overlook assets, such as a car or checking account. A properly completed loan application can reveal how debt-to-income ratios impact a homebuyer’s ability to borrow.

Avoid overextending finances. Borrowing the maximum amount possible might not be in your best interest. No lender wants to set up a borrower to fail. At Rural 1st, our goal is to help buyers achieve their goal of a dream home in the country -- within a budget that allows for, say, an unexpected car payment or fun family outings. 

As a general rule, aim for the industry’s 28/36 standard, meaning a household should spend a maximum of 28 percent of its gross monthly income on total housing expenses and no more than 36 percent on total debt. This guideline is a great way for homebuyers to calculate what they can comfortably afford without crossing their borrowing limit.

Consider the size of the property. Some lenders are hesitant to offer financing for farms and acreages they define as nonconforming properties. FCSAmerica, however, can finance any sized lot.

Large properties, those more than 40 acres, sometimes require a higher down payment and shorter loan term. But a property under that threshold is viewed as a traditional home loan product at FCSAmerica. This provides a great deal of flexibility for buyers seeking a loan that fits their needs.

Seek out the right lender. Lenders stand out from the competition by the areas they specialize in. For example, do you need a lender that is attuned to the needs of self-employed borrowers?

As an agricultural lender serving farmers and ranchers, FCSAmerica has deep and unique insights into the financial situations of the self-employed market and can use trends and averages to get loan approvals.

Rural 1st® is a tradename and Rural 1st, the Rolling Hills Window icon, Rural Logic, and Closer to What Matters are exclusive trademarks of Farm Credit Mid-America, NMLS 407249. Rural 1st products are available to consumers within the territories of participating Farm Credit System Associations.


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