Can I afford a $460,000 house?

Question

I have $100,000 and can most likely get $40,000 more from parents. I make $30,000 a year. My wife would do some renovations as well so may cost another $20,000 plus taxes and fees etc. This is our dream house but can we afford it? Please explain.

Answer 1

DON'T DO IT!! Stretch yourself to the limit financially when it comes to real estate- but don't go beyond that limit!

460k, minus 100k--- a $360k loan. Sure, you can get money from your folks, but borrowing (or pleading for a gift) sux.

If you make 30k a year, I'd look in to a $250,000 loan, putting you in the $350,000 range. This will allow you room to breathe in your finances, get you into a good investment and keep you living within your means.

Renovations doesn't sound like a dream house. If you're looking to do renovations anyway, look at something in your price range and make it your dream house.

LIVE WITHIN YOUR MEANS!!!!!

Answer 2

You can't afford it, even though you have $100,000. I don't mean to disrespect you, but, rental accomodation or mortgages should never be more than 25% of your monthly income. If it is, then, it is very likely that someday you could be looking at a foreclosed property.

The reason I say that is that a $460,000 on paper actually costs upwards of $500,000 because you have to include taxes to the government, body corp fees, local government charges, maintenance etc. So, that house/home will cost you more than $500,000 to say the very least, not to mention some of your lender's othe charges. You'll end up spending more time trying to pay off your loan rather than enjoying your dream house.

I think you'd be better offer starting off with a cheaper place, building equity and then gradually getting a larger house/home. Perhaps, you could also get a reputable builder to build your dream home; it may be cheaper, but a lot harder to build the home from scratch--in terms of getting building approvals, getting a contractor reputable enough to complete the job, labor costs etc.

Answer 3

you're looking at around $2,500 a month unless you do some creative financing.
to see for yourself, type in the keywords - Mortgage Calculator into a Google search. You will get tons of websites that will popup with different calculator.
Also, There is a thing called the Rule of Tens
take the amount of the house 460,000 / 10,000 = 46
take 46 * 10 = 460
take 460 * 5.5 = 2530
The Rule of Tens is a Rule of Thumb to approximate montly mortgage payments, For every $10,000 barrowed, multiply that number by the interest rate times 10
OH, yeah, I forgot you have 100,000 to put down. But you can do the calculations yourself, I'm sure.

Answer 4

You would be foolish to finance $320K on a $30K/year income. You might be able to barely barely barley afford the payments (depending on your interest rate and length of the loan) but what happens if your car breaks down, the water heater goes out, or you are unable to work for a few months due to an accident or illness? Talk to a loan officer at your bank. They can help you go over your debt to income ratio and figure out how much house you can afford. The general rule of thumb is not to finance more than three times your annual income.

Answer 5

No you have 340,000 to pay - that would take you 11 years to pay off if you devoted your entire salary to the task and if the bank decided to give you an interest free loan. Assuming that you want health insurance, savings, retirement, food, property taxes. you might be able to contribute like 400 dollars a month if that to this mortgage. This would take you 80 years to pay off - again assuming the bank give you an interest free loan (this is NOT going to happen) - Given how low your income and likely lack of credit history is you will not get a good interest rate from the bank and will end up paying off the mortgage for a few hundred years -- the bank will not give you a loan.

Answer 6

To qualify for a traditional loan you salary must meet these two conditions:

Your gross (pre-taxes) monthly salary must be greater than 28% of the sum of the monthly mortgage and monthly tax payments.
Your gross (pre-taxes) monthly salary must be greater than 35% of the sum of the monthly mortgage, monthly tax and other monthly debt payments.

For a $460,000.00 traditional 30 yr fixed rate @ 5.87%, annual taxes at $2400.00 and $1,000.00 in other monthly debts (such as car loans, credit cards, etc) You would need an income of $134386.42 annually to qualify.

I would suggest taking the $140,000.00 cash and purchasing a smaller home in the $140,000-250,000 price range building up equity and then, sell and move up to your dream house. Also get an experienced real estate agent to help you. A good agent can help you with this and any other questions you have about buying your dream home.

Answer 7

I don't even think you can afford the property taxes on a house that expensive.

A house like that probably has property taxes in the $10,000-$20,000 range. Even if we take the low end of that, 33% of your income would go to paying the property tax.

Answer 8

if you have good credit you can get put 20% down and get a mortage of 370k plus closing costs(pennies) which shoul dbe something like 3k a month a mortage lender does not want to lend you money over 40% debt to income .. looks like a tough deal. Find a couple mortage brokers and find out their thoughts.. where theres a will theres a way.. just dont bankrupt yourself.

Answer 9

Most loan companies will loan you up to about 3-3 1/2 times your joint annual income. So you will still fall well short of the purchase price.

Answer 10

No you cant afford it sorry man you dont make enough money go for a 100,000 dollar house im sure you can find one that you will like just as well