What is the general rule for knowing how much house you can afford?

Answer 1

You did not say how much your salary is a year, so taking a estimate ok. Lenders take into consideration your DTI. Debit to income ratio - if you go conforming (great credit) your DTI is 45 percent (FHA is lower). If you go sub-prime, the DTI is 55 percent.

Salary 65,000 year divided by 12 = 5416.67
Say taxes / ins is 2000.00 year = 166.67
Auto and 3 credit cards = 500 mo
Lenders take what is on your credit report, utilities and cell phone, etc are not included (ok)

5415.67 - 166.67 = 5250.00 -500.00 = 4750.00
4750.00 at 45 percent is 2137.50

A 300,000 home at 7 percent is 1995.90 P/I
Hope this gives you some idea - This is just a estimate - ok -

ADDITIONAL HELPFUL INFORMATION TO KNOW

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thur a realitor, and the seller has to pay the realitor their fee which runs from 2-6 percent of the selling price, and you ask for 4-5 percent toward closing cost -assistance) Follow me so far??

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

Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Lenders look at the middle score...of the 3 scores. If you only have 1 score or 2 scores (have seen it), it is still workable....but unless a lender sees the whole picture - credit - income - job time, etc - than you will not have a "true" picture of what you can afford - Hope this helps - There are also Government programs out there, but they too are looking for job time, etc.....They are not so much looking a credit - but the other factors are taken into consideration. With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true.

Decided on the type of program (loan ) you are wanting. A 30 yr fix is still roughly at a 6.5 rate right now - but if you are needing a 90 percent ltv the rate is around 7 percent and a 95 ltv is 7.375 and a 100 percent rate is 7.5 ( This is a estimate only, since I do not know what your credit score's are....There are also, interest only loans - adjustable loans, option arms (where you pick the payment, from 4 payments, including interest only). Interest only are lower payments, but nothing is being paid on your home. Some self-employed ppl like the payment options, in a lean month when money is tight., they can pay a lesser amount.

Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency’s and other useful information.

Answer 2

unfortunately, general rule is 40% of gross income including all your bills. I say unfortunatealy becuase this is where the average person gets into the robbing peter to pay paul way of living. A rule I have lived by is you should own a car that you can pay off with one months pay and you should own a home that you can pay off with 2x your annual income. This is impossible for some people but living by this rule, I never have to worry about making payments or having money in the bank. Try to invest 30% of you income first, if you can do this for a period of a year, you are on to a good start.

Answer 3

Usually between 40-50% Debt to Income Ratio

Answer 4

You are usually eligible for an amount not greater than 3x your income with a debt to income ratio of 40%.

So, if you earn $50k p.a., then you can qualify for a mortgage of aboubt $150k. To figure out what your monthly payment should be deduct your living expenses other than rent (bills, credit cards from your gross pay). Take that figure and divide by the gross pay and if it is in excess of 40%, your loan amt will need to be lower than $150k or provided at the lowest rate possible depending on your credit....it sounds complicated but a broker/bank can help you figure it out.....

Answer 5

A paper the rule of thumb is 45% of gross income for debt service and housing.

Subprime will generally go to 50%, and some will go as high as 60%.

This article will take you through the math

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

Answer 6

the appropriate project for you to be able to pay for a house is in case you upload your earnings and her earnings (ok, say it really is totaled at $60,000) and also you've 20% from mark downs to positioned down....then you might want to purchase a $60,000 domicile.....in reality there likely isn't any $60,000 houses accessible. known if $one hundred,000 to $one hundred fifty,000. and also you ought to make certain that in case you marry then at what factor might want to you commence a kin and enable for that (became once one baby fee $sixty 5,000 from formative years to age 18 plus the spouse's clinical expenditures). The loan fiasco isn't over yet. And the single-3 hundred and sixty 5 days unemployment comp advantages absolutely everyone is receiving are determining. And we are waiting for more desirable unemployment in the close to destiny. If I were your adviser i might want to assert that even even with the undeniable fact that houses will be a lot less extreme priced in the present day that inflation might want to nevertheless take position, plus taxes are going up, easily each little thing has risen in fee, and that i might want to be advising you to attend till you've more desirable earnings the business company and a sturdy nestegg for yourselves previously you're attempting to purchase a house. And await the will boost and promotions on the job to go back in.

Answer 7

Looking at some of the answers you are getting I now know why there are so many foreclosures.

1.5 times your gross annual income should be the maximum amount of your mortgage. This will leave you with enough to pay your utilities, buy groceries, pay your car insurance, etc.

Answer 8

http://www.julieparrishrealty.com/price.html

Answer 9

http://www.bankrate.com/yclc/calc/how-much-house/calculator.asp?Iw=0&Ii=0&Ia=0&Io=0&D=0&T=0&R=0&Ei=0&Ex=0&Ec=0&Ea=0&Ed=0&tEo=0&prod_number=28338423&header_name=Mortgage&product_name=Mortgage