I earn 120,000 a year (before taxes, morgage, etc.) and have 2 kids. How expensive of a house can i afford?

Question

just answer the question.

Answer 1

Your lying. Otherwise if you made that much money you would have a brain and know the answer.

Answer 2

The general rule that all banks use is that your mortgage can't be greater than 28% of your gross wages. Simply using this rule of thumb would suggest that you could afford a home of $428,000 ($120,000 / 0.28).

Of course, as others here have suggested, there are other factors to consider and some of these will be considered by the bank:

1. What are your othert debts (cars, credit cards, etc)?
2. What is your down payment?
3. Any unusual monthly expenses?

Etc, etc, etc.

Interest rates are at 3 -4 year highs but given historical averages, they are still relatively low. Given that, I would stay away from spending at the high end of your range if (1) this is your first home, (2) you have less than 20% for a down payment, or (3) you plan to get an adjustable rate mortgage.

I'm a big fan of hybrids - fixed for 5 or 7 years given normal circumstances.

Hope that helps

Answer 3

Your gross earnings isn't the criteria, use the web after taxes. Your modern morgtage will purely roll into the recent one. today, once you're purely making ends meet, your modern charge may be all you need to be mushy with. once you've any extra on the accurate of a month, then you definately may evaluate a larger month-to-month charge. As an previous timer, If any extra, you should judge some mark downs, even a minimum amt. Then evaluate your ideas. in case you desire an concept of what value living house you could arise with the money for, depending on the charge, a pair aspects come into play. Your credit status, no longer my business enterprise, which will impression your interest price, and the present interest price no matter in case your credit is A1. i ought to run an amortization for you, yet i'd desire the anticipated interest price, and the kind of years. i am going to do better than one, yet pick somewhat time, no better than 30 min. to an hour. you could contact me by potential of this board.

Answer 4

It depends on your other debts/expenses. Are your kids in day care? Are they in college? When our combined income 6 years ago was 110K, our realtor said that we could afford a 390K home (30 yr fixed, with no other debts.) Sounded great, bigger and better home. But we didn't go for it because the payments would leave us absolutely no room for any errors. So we opted for a house in the mid 200s. Now we have 2 kids, and able to live pretty comfortably without having to stress for finances based on our income. We could have afforded the 390K home then. But we wouldn't be able to afford the payments for that house now with added responsibilities.

Answer 5

I am guessing this income is your total household income? They will tell you that you can afford way more than you actually can comfortably afford. I would suggest around $300K. Not sure what area of the country you live in - you may have to go higher to get something decent.

Answer 6

With 2 kids that will both need to be put through college in the future...You can probably afford a $10,000 double wide trailer.

Answer 7

I think if you get a 1/2 interest only, 5 year mortgage you should be able to afford a house worth 10,000,000.00 , just like everyone else!

Answer 8

A lot more house than I can.. but seriously I think there are calculators out there for things like that.. I would say like 300,000+ easy

Answer 9

I don't know how much debt your carrying and how much you pay in bills a month. Here's a website that can help you figure out how much you can afford.

http://www.firstmeridiancapital.com/HowMuchYouCanAfford

Answer 10

How To Buy Your First Home - (1st Time Home Buyer Secrets Revealed)

If you're about to purchase your first home, let me be the first to congratulate you.

Certain loans and programs vary by state. Besides the considering your income into the equation, what is your financial plan for your children? Have you begun to save for their education and your retirement?

Currently do you have either a 401(k) or IRA? Remember, a mortgage is often one of the largest financial transactions we undertake in a lifetime.

That being said, how you arrange your Mortgage to your overall financial plan is very important. Here then also are the other consideration you need to add to the equation before simply taking your income and asking for what your might qualify.

WHY HOMEOWNERSHIP IS SMARTER THAN RENTING

- Income Tax Savings - As a homeowner, you can deduct your mortgage interest from your personal taxes. This can really add up. That's thousands of dollars per year - in your pocket! If you add up the tax savings, you might be surprised to find out that, after you factor in tax savings, you can own a home that has more room than your apartment - and still end up paying less than you are paying right now for rent!
- Home Equity - Every time you write a check to your landlord, you might as well be flushing that money down the drain. It's gone forever. But when you own a home of your own, you will be building equity in something that belongs to you. The principal you pay each month is similar to depositing money into a savings account. After many years of paying into the home, you will have a tidy nest egg saved up that you can use for emergencies, your children's education, or retirement.
- Security, Comfort, and Privacy - There is a reason people call homeownership 'The American Dream'. A home is something special that you can call you own. You can be proud to invite your friends and family over and show them 'your home'.

THE MONEY - HOW TO GET THE FINANCING YOU NEED

- Banks vs. Mortgage Lenders - You first need to understand the difference between banks and individual mortgage originators like us. Banks handle savings accounts, car loans, investment accounts, etc. Mortgages are just one of many services they provide. We're different because we only deal in mortgage loans. We sleep, eat, and breathe mortgage loans and nothing else. Would you go to a general physician to have heart surgery performed? Of course not. So why go to a big bank, when what you need is a mortgage specialist?
- Timing is Everything - It has never been cheaper and easier to borrow money to buy a home than it is right now. Even if rates go up a bit, they will still be monumentally lower than they were back in the 1980s, for instance. Back then rates were as high as 20%! Nowadays, even people with bad credit regularly get rates much, much lower than this. But don't wait too long. Rates are cyclical. They will start rising again, and you will have missed your chance at homeownership.

UNCLE SAM WANTS TO HELP YOU BUY A HOME

- Uncle Sam is Your Friend - The U.S. Government wants for you to own a home and they will go the extra mile to help you afford one. Why? Well, every time one home is built, the effect on the economy is quite significant. Think of all the people involved in the construction of a new home, for instance. Welders, Electricians, Carpenters, Plumbers, Framers, Roofers and others are greatly affected by your choice to purchase a home.
- Little or NO Down Payment - Uncle Sam has programs like FHA and VA that can help you get into a home with a low down payment, or in some cases, with ZERO down.
- FHA and VA Programs - If you read our mortgage glossary, which is available for download by visiting my website, you will discover that FHA stands for 'Federal Housing Administration' and that VA stands for 'Veteran Affairs'. Get familiar with these programs, because they just might be your ticket to the American Dream.

HOW TO DETERMINE IF YOU QUALIFY FOR AN FHA OR VA LOAN

- VA Specifics - The VA Loan allows active or honorably discharged military personnel to obtain a home loan with 0% Down Payment. In addition, the seller is required to pay a large portion of your loan closing costs!

- Do You Qualify for a VA Loan? - To determine if you qualify for the VA loan, you simply need to meet the following criteria. First, you must be either active in one of the Armed Forces or an honorably discharged military veteran. Second, you must have reasonable debt-to-income ratio. This means that your current bills (car loan, student loans, bank loans and credit card bills) cannot exceed 41% of your income.
- FHA Specifics - If you don't qualify for a VA loan, then you should look into an FHA Loan. The FHA Loan Program allows little or no down payment, depending on your circumstances. The largest down payment you may be required to provide is 5% down. In addition, the FHA loan is also very liberal, in that, it allows a 41% debt-to-income ratio (including your mortgage payment), just like the VA Program.
- Do You Qualify for an FHA loan? - If you have proof of employment, a small down payment, and a decent payment history for your other bills in the last two years, you would likely qualify for an FHA Mortgage.
- What if you are Self-Employed? - If you are self-employed, that's OK too. We will simply need proof of income from your most recent tax returns. If you can provide this, and meet the regular criteria for an FHA loan as listed above, you qualify!

ABOUT YOUR CREDIT SCORE

Studies show that most Americans would rather see their dentist than have an appointment with a mortgage loan officer. The likely reason is that they are afraid of rejection - afraid of the big bad loan officer who will stamp a big red NO on their application. This is far from reality. Remember, Commissioned Mortgage Originators are in the business of saying YES. We've heard it all and seen it all and we are willing to help you, no matter what your situation is.

- Credit Problems are OK - You might be confused about how a lender determines if your credit is good enough to qualify for a mortgage loan. Let's clear up that confusion right now. Basically, if you've had credit problems in the past, the mortgage company will look at those problems and ask the following questions:
a.) How far in the past are your credit problems? (i.e.- if you had multiple delinquencies on your credit card this year, you might not be able to obtain a loan)
b.) If your credit problem is in the past, is it likely to recur again?
c.) Is whatever it is that caused your credit problem gone, or is it still present today?
d.) How good is the probability that you will pay your bills faithfully every month from now on?
- Judgments - If you have a judgment against you that has not been satisfied, you will not be able to obtain a mortgage loan. To obtain a mortgage loan, the mortgage company will require title insurance. Title insurance cannot be applied against your loan if you have an outstanding judgment.
- FICO Score - Although lenders look at much more than just your 3 digit FICO (credit) score, you should try to keep your credit as clean as possible, because the higher the score, the better!
- No Credit History - Even if you don't have any credit history whatsoever, you can qualify for a mortgage loan. As a matter of fact, it's not all that difficult. If you have a stable income, proof of employment, and a small down payment, you too can qualify for a mortgage loan!