How Much House Can I Afford

Tom Said:

How much house can i afford?

We Answered:

25 cents.

Kristina Said:

How true are the "how much house you can afford calculators"?

We Answered:

Forget about those type of calulators.

If the max that you can afford for a house pmt each month is $860 then you can get a house for around $90,000-100,000.

At 6.5% APR, a $90,000 house is $568 a month according to the Ditech mortgage calculator. You then have to add on about $300-$350 a month for taxes, home owners ins. and PMI (which is required if you put under 20% down pmt).

What you should do is figure out how much you can afford a month then mess around with the #'s on mortgage calculators. (I usually look it up on Bank of America and Ditech). They will usually only tell you how much you'll be spending on prinipal and interest a month. Then you need to add on the $300-350 yourself. The PMI (Private Mortgae Ins) will have to be paid for about 10-15 years on a 30 year loan.
To find out the rates on everything for you area, pick a mortgage company with a low rate and call to get pre-qualified over the phone. You just give them some basic info. They can tell you what you'll prob expect to pay each month.

I know that me and my hubby can afford 115,000 to 125,000 house. I just tried one of those calculators and it also gave me a # of about $55,000. I know for sure that we can afford more b/c I've spoken with a bank and they've qualified me for more.

My sister lives in Ohio and has a $181,000 house and only pays $1210 a month for everything.
I live in Texas and was quoted $1050 a month for $125,000 house.
Doesn't that just stink.

Hope this helps.

Lisa Said:

Ignoring cost of land, about how much house can I afford to build?

We Answered:

it is possible to get what you want at your budget. places where you can't skip on quality are your foundation and the actual building of your house. money saving tips- instead of bricking, try siding of any kind.

for good info, visit www.hgtv.com and www.bobvilahomes.com

Eleanor Said:

How much can I afford to spend on a house on 90k/year salary? Boston area?

We Answered:

yes iffy is correct
mortgage lenders will not give you more than three times of your income
you can get up to 370 k as you are not having any previous loans you can get the loan easily
hope i helped you!

Armando Said:

When calulating how much house you can afford, what is included in monthly debt?

We Answered:

When calculating how much home you can afford to buy, lenders use debt to income ratios (DTI) to determine how much you can safely borrow. There are two ratios used, front and back end ratios.

The front end ratio is a measurement of the total monthly house obligations. The acronym PITI is commonly used. It stands for Principle, Interest, Taxes and Insurance. The Principle and Interest represents the montly mortgage payment, Taxes are the property taxes broken down to monthly increments, and Hazard Insurance to insure the structure from fire, natural disasters, etc. PITI would also include monthly mortgage insurance payments and Association dues/fees if applicable. The total of all of these monthly house expenses divided by your monthly gross income will be your front end ratio.
For conforming loans, the front end ratio is typically 28%
For FHA loans, the ratio is 31%.
Example:
Principle and interest payments= $1500
Property Taxes= $250
Insurance= $250
Total housing expenses= $2000

Gross annual income= $85,000
Gross monthly income= $7083 ($85,000 / 12 months)

Front end DTI= $2000 / $7083 = 28%

The back end ratio adds all monthly recurring debt to the total house debt to arrive at the back end ratio.
For conforming loans, the back end ratio is typically 36%
For FHA loans, the ratio is 43%.

Example:
Car payment= $200
Credit card payments= $200
Student loan= $150
PITI= $2000
Total monthly debt obligations= $2550

Back end DTI = $2550 / $7083 = 36%

Calculating FHA loans are a little different. I saw a great site that shows how to calculate FHA DTI ratios. http://www.crystalclearmarket.com/?p=142

Hope this helps. Good luck to you.

Elliot Lau, Realtor of 22 years

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