How expensive of a house can I buy?

Question

I can pay up to $1600/month. I have an average credit score (670). Not too sure what kind of down payment I can get. I'm a first-time home buyer.

Answer 1

Lenders will tell you all kinds of things, and there are many mortgage calculators out there.

I will tell you that from personal experience I have learned not to finance more than 1.5 times my gross annual income. Most people can get a loan much bigger than that, but lenders do not care if you have enough money to pay for groceries. Many people are over financed.

You will need to decide if you are going to have your property taxes and homeowner's insurance included (escrow).

There are many programs available for first time homebuyers. I bought my first house with nothing out of pocket, the county paid my down payment.

Talk to a broker. Ask what kind of programs are available in your area.

Answer 2

You can easily GET 100% financing. However, that will increase your payments. First, you will be paying for financing on 100% of the property, second the interest rates on 100% financing options (regardless which option you choose) will be higher than if you put down 5, 10 or 20%. Not sure what taxes and insurance are where you are at. Here in Florida they are fairly steep. So, the house you buy will depend on:

1) How much can you put as a down payment?
2) How much are taxes and insurance?

Let's assume 10% downpayment, and taxes of 2% of home value as well as insurance for the same amount.

If you can get 7.5% (hopefully better, but pretty close to that) for a 140,000 loan - 30 year fixed, you are paying $979, principal and interest.

If you paid ~$155,000 - this would be about 140k, loan give or take. Taxes and insurance would each be ~$300/month. If this is higher or lower, you can adjust the amounts accordingly. Just fill in the blanks:

1) Loan Amount________ (= purchase price - downpayment)
2) LTV _________ (=loan amount/purchase price)
3) Finance________ (Principal and Interest on loan amount)
4) Taxes ________ (ask a realtor)
5) Insurance_______ (ask a realtor or lookup)

If you do 100% financing, you are probably somewhere 8% or higher. 90% you should be able to do better than 7.5% and 80% you will be in the 6's. Just add up 3,4 and 5.

This is all provided your income is enough so that all of your debts (including the house) is only 40% of income. Again, you can do it if your income is not that much, but you will pay a higher price.

Hope that helps.

Joe...

Answer 3

If you can pay 20% down, you can avoid mortgage insurance. The rule of thumb is that your mortgage doesn't exceed 25% of your gross income and that all your loans (car payments, credit cards, etc.) don't exceed 35%. For most people that's way too much.

Assuming $1600/month is less than that, then use an online calculator to see what that gets you. Keep in mind a couple extra bills you'll have - property tax, homeowners insurance, and maintenance. But the good news is that the interest on your mortgage will be tax deductible, which will probably be enough to cover these extra items that you aren't currently paying.

Answer 4

Go to realtor.com There you can get many questions answered from before buying, starting buying, offering, financing, closing. Good idea to get pre-approved.

Since you are a first time home buyer there are many programs you can advantage of that allows you to make a very small to no downpayment with a low low fix rate term. Also many cities can offer you special programs (SHIP and some others)

If you are in FL drop me an e-amil and I can help you out.

Answer 5

Check out www.usfinancialservices.com It has a calcutaor so you can determine your payment and loan amount. Good Luck!

Answer 6

You would need to tell us your income and how much you have for a down payment if you want a legitimate answer.