Is $86,000 a year enough money to afford a $270,000 home?

Question

My fiance and I make between $84-88,000 a year depending on her overtime at work. We don't have any kids yet, and the only debt we have is my $525 a month student loan payment. I think we can afford it, am I correct in saying this? We have $20,000 for a down payment. Thanks.

The house would be a new model with all fixtures and appliances. When the kids come, my fiance's sister (who stays home during the day) would live only 5 blocks away and she has expressed she would be more than happy to take care of our kids at NO cost since we have watched her kids NUMEROUS times.

Answer 1

Yes, with ease.

A 250k loan would be around 1600-1700 a month for the mortgage. Roughly 250 a month in taxes. And figure 70-100 a month in insurance. And then you have a 525 debt. So thats a total of about 2530/month in payments and you make 7166. Putting you at a 35% debt ratio. Which is perfect and leaves you plenty of breathing room.

By the way, for the guy below me who said 2.5 times your income is what you can afford... i dont know who told you that or where you heard it. But that would extremely conservative. Our mortgage broker, who is a close family friend said 4-4.5 times your income is what you can afford in most cases.

You could probably go as high as 45% and still be ok. Which means maybe a home as high as 325k.

Answer 2

There are many factors to consider when buying a home. Simply based on the numbers, you probably have the income, but it is a major commitment and you're not yet married. Consider all the aspects of home ownership. You are resposnbile for principal, interest, taxes, insurance and maintenance

What about when you do have children and someone wants to stay home to take care of the kids? .What if someone is sick or injured, loses their job and you have a mortgage that depends on both people.

Consider a smaller starter home, consider waiting until you are married and have a bit more for a down payment. Hopefully, you can also create an emergency fund and a financial plan.

Answer 3

Using this guide line: 3 times salary you should be OK to buy it after the $20,000 down (3 * 86,000 =258,000). Your mortgage would be $250,000. Be sure you consider taxes, insurance and other costs though. If you are in a high real estate tax state (Ohio comes to mind) it cuts it a little closer.

Also, be sure you check it out on a mortgage calculator for the type of loan you are considering and then add in other expenses like HOA fees, taxes, insurance, maintenance, lawn care, etc.

Answer 4

I would say yes you could afford it. But you dont have enough of a down payment yet; I would aim for 10-15% (27K-32K). $525 is a lot for a student loan payment too!

Your mortgage payments are going to be upwards around 1500$+

If you can afford those payments then yes.

Be sure to get the down payment up though.

Answer 5

The usual affordability is roughly 2 1/2 times your income, which in your case would be 215,000. Though I am sure you could get approved, I would tend to stay away from the high end of your affordability. You also have to consider future maintenance and upkeep, taxes, PMI, and insurance. That can all add up to more than you realize. Get the most home you can comfortably afford, but be conservative.

RW

Answer 6

Damn.. I only make $60-70,000 a year and I live in California.
If you're worried about a $270,000 home - how the heck am I going to afford something out here..??

Answer 7

It's more than enough......for a $270k loan and level of debt that you have, you would qualify with $54-$60k per year....good luck!

Answer 8

you should be able to swing it. no car payments? can you afford to save and pay the mortgage?