Trying to understand when it’s time to purchase a home? With interest rates going from 3%-%7% in less than a year impacts the amount of home they can afford.

Below you will see how much of an impact a 4% difference in a 30 year mortgage loan be!

Remember these solid underlining rules for traditional lending.

Credit Score:
To get the lowest rates available you'll need 700 Fico or better. But some lenders will do down as low as 660 but with a much higher rate.

Income:
Most important to understand your new mortgage payment can not exceed 30% of you TAXABLE income. Banks don't go by GROSS INCOME they go by your income amount you pay taxes on. That's why self-employed people are hard to qualify because they have a lower taxable income due to tax write offs.

Proof of income and reserves:
You will need the following:
3 months bank statements, last two years tax returns as well as last two years W-2.
Banks like to see you have at least 3-6 months of payments in reserve.

LTV/Loan to Value:
Banks want to make sure if you stop making your payments that there is enough equity in your home when your purchase it that in the event of a foreclosure they can recoup all the money they lent out and any costs. Rule of thumb in traditional lending is 30%. So a bank will loan your 70% of the appraised value.