Should it be double your income, etc.?
2006-12-22 16:49:41 · 5 answers · asked by gush_gush_2010 1 in Business & Finance ➔ Renting & Real Estate
Your house payment should not be more than 30% of your income.
You do the figures-
Thing is, most americans think they have to have MORE than they can afford.
There is much peace in a low house payment and you having lots of your paycheck left each month.
Its a good place to be living modestly.
2006-12-22 16:53:58 · answer #1 · answered by SunValleyLife 4 · 1⤊ 0⤋
The value of your home isn't what you should be looking at. It's the mortgage payment versus your monthly income. While the answers here are correct as to where your debt to income ratio should land, there are several of my clients that have DTI ratios at 50%, and a few lenders that will allow up to 55% DTI.
Your debt to income ratio is not just determined by your mortgage payments, it's determined by all of the liabilities listed on your credit report (Utilities are usually not listed).
For any other questions concerning mortgages, email me or check out our website.
Baconshmals@yahoo.com
2006-12-23 16:00:49 · answer #2 · answered by baconshmals 2 · 0⤊ 0⤋
There is no valid comparison between income and your home's worth. You can buy sensibly and ride a property boom to an absurd level but still swing your mortgage payments. Or you could buy above a reasonable limit and have a property bust make it look modest but still struggle to make the payments.
My agent thought I was nuts when I bought so low compared to what I could qualify for. But my mortgage payments are only about 10% of my gross pay which has allowed me to salt enough away that if I lost my job tomorrow I could continue my current "burn rate" for over a year and not worry about anything. THAT, my friend, is TRUE financial freedom.
2006-12-23 08:32:38 · answer #3 · answered by Bostonian In MO 7 · 2⤊ 0⤋
To qualify for a home loan, lenders usually look for about 28% monthly income to monthly home payment ratio. Divide your monthly income by the total housing payment: principle and interest, tax and insurance, then you'll have your percentage. That figure is called your front-end ratio. Speak with lenders and they can clear it up for you first hand.
2006-12-23 02:20:54 · answer #4 · answered by Skywalking 3 · 0⤊ 0⤋
Aim for a home you can really afford. The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary.
Affordable Home Calculator From CNN Money: http://cgi.money.cnn.com/tools/houseafford/houseafford.html
http://www.pueblo.gsa.gov/cic_text/housing/low_down/low_down.htm
2006-12-23 01:04:14 · answer #5 · answered by JFAD 5 · 0⤊ 0⤋