What % of my salary, should be assigned to pay for a mortgage?

Question

For example, if I earn $8,200 gross monthly ($4,200 fixed from salary) ($4,000 from comissions) what percentage of my salary should be used to pay for a monthly payment, and what price should I look on a house?

Thank's

Answer 1

Never figure your commission into your budget! There are all kinds of calculators out there, most of them will get you into big trouble. Try not to exceed 25% of your fixed income to keep yourself solvent.

Answer 2

Dear Juan M.
There are 2 ways of qualify you. One is going state income, and your income on the loan application is put down as 8,000 - and you could afford a a home in the 500,000 + range. But would not recomment it - ok - unless you want to have a high mortgage.

500,000 at 7 percent = 3,326.50 P/I that is not including property taxes and home owners insurance. For that home amt, estimate your taxes @ 10,000 year (estimated high) and HO insurance at 1,500 yr = 11,500 yr divided by 12 = 958.34 month for a total payment of 4,284.84

(you could go interest only, makes your payment lower, BUT nothing is paid on Principle, do not recommend it, but have done them, for ppl who know they only want to stay in the home 5 years or less).


I would recommend going lower - say a 300,000 home - your PI would be 1,995.90
Taxes and insurance 850.00 month for a total payment of 2845.90 (diffently leaves you more money for other things)

2. Go off your income of 4,200 at 45 percent = 1890.00 - - your P/I, Taxes and Insurance would need to be with in that payment. A home around 250,000 would be possible. Or high - look at propertys that have a lower property tax. This is all an estimate, since I do not know what your middle credit score is.

When you get ready, consider the following:

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down

Answer 3

There is no fixed guideline any more. With the abundance of "creative" (read risky) loans available these days anything is possible. The danger, however, is that while it may be easy to get the loan, you still have to pay it.

This article gives you a good perspective on the implications of choosing different percentages of gross income to pay for a home loan:

http://housingbubblecasualty.com/?p=36

Hope this helps.

Mario Sanchez
http://www.GoodNeighborBuysHouses.com

Answer 4

Fannie Mae and Freddie Mac, who control the A paper market, have guidelines that total debt service should not exceed 45%. This includes car payments, credit cards, other installment debt, and your total cost of housing. Subprime lenders will go fifty, fifty five, or even sixty percent.

There's an in depth article that takes you through the math here

http://www.danmelson.com/posts/1147464929.shtml

Answer 5

Ideally 1/3 but 1/2 would not be as bad.

Answer 6

28% is the conservative rule of thumb for most lenders with 41% total of all your minimum payments on housing and credit cards but your total debt needs to be less than 65% with good credit using Fannie Mae. Other lenders are more strict. It all depends on credit for your maximum. I would suggest keeping it below 28% if you want to be financially responsible.

Answer 7

25% of monthly income for hose payment 2and1/2 times your annual salary for how munch to spend on your house

Answer 8

One week's basic pay per month for a house payment..

This is not to include any comissions
You payments should not exceed $ 1,025 per month from what you say.

Answer 9

Read some mortgage tips and articles on this site

Answer 10

25% this allows you to pay other bills and still have some spending cash