Can I afford a $400,000 mortgage on yearly gross income of $130K?

Question

I am looking in NJ. My other monthly debt/car payment $1000/month. I am guessing taxes around $8K. Married with 2 young kids (wife-homemaker)

Answer 1

Here are some monthly payment numbers you would be looking at (depending on the interest rate you are able to negotiate) ...

@ 5.00% interest, monthly payment = $2147
@ 5.50% interest, monthly payment = $2271
@ 6.00% interest, monthly payment = $2398
@ 6.50% interest, monthly payment = $2528
@ 7.00% interest, monthly payment = $2661

Assuming you get 7% (just to be on the safe side), your "fixed" expenses (monthly debt, car payment, taxes, house) is coming out to about 54,000 per year. That leaves with $76,000 to pay income taxes, live your life and save a little. Yup I think you can afford this house.

Answer 2

Yes... experts say that can afford a mortgage of up to 4 times you salary in general.

It may be a little tight with your other expenses, but you should net enough to be able to pay the mortgage amount each month without a problem. We just got 350k mortgage on a 105k a year salary.. and we are going to be able to pay the bills easily.

Answer 3

See how much a $400,000 mortgage would be monthly, and then compare that (plus real estate taxes) to what you are paying now for either a mortgage (plus real estate taxes) or for rent. Say for example the $400,000 mortgage would be $2,000 per month, and your current mortgage or rent is $1,000 per month. You would therefore have to come up with an additional $1,000 per month. If you are currently saving that much or more, then you would have the increased payment already covered. If not, than you need to see if there is any expenses you could cut down on or or eliminate. Also, if kids are school age then wife could get part-time job while kids are in school. Explore all your options, but don't buy the house if you are going to stretch things so far that you are just living for the house.

Answer 4

Not in my opinion. With the following debts, you should stick to a mortgage of no more than $250k. Kids are expensive and you never know what will come up.

$1000/month + income taxes+property taxes+wife+2kids= you need to stick to the mid-lower price range of your approval limit.

Answer 5

It's your decision whether you can afford it or not. Consider that interest and principal payments alone on such a mortgage will take over $30,000 per year. Add to that monthly property taxes and insurance for the purchase you will make. Your debt load retirement, from what you state, will amount to $42,000 per year. That's almost a third of your income BEFORE taxes.

Answer 6

YES YOU CAN. I am on a 438,000 mortgage making 70,000 a year (plus 12,000 rental income) with no problem paying the mortgage AND sending the kids to private school. You just have to brown bag the lunch and be Ok with driving a five year old car.

Answer 7

if you
A- know how to budget- this also means keeping an eye on what your wife spends.
B- Don't have several other credit cards that you didn't say anything about.
C- Don't lose your job.
The thing with watching your wife my seem harsh but I almost got my husband and I in trouble with my sneaking around and buying stuff. He had no idea.

Answer 8

I don't think so. I think you'll need to save up some money and put down $100,000. If you're super, super cheap, you should be able to save that much in a couple years.

Answer 9

If you make that much money, you would think that you'd have an accountant to ask this question to...

Answer 10

.