If you are paying around $1100 a month in rent, what is the optimun affordable $ amount for a house?

Question

with average credit?

Answer 1

Elaine has some good points but with an average credit rating you will need a bigger down payment and it is harder to get loans now if your credit is damaged- also you might have to buy mortgage insurance which is expensive. Consider the real estate taxes and homeowners insurance as part of your monthly expenses. Depending on where you live HO ins can be very high. You should not spend more than one third of your total income on mortgage, tax, ins and utilties. Maintenance of the house and property are also an onging expense. If you can afford it buying is always a better option. If you have credit card debt you should get rid of that first. It is easy to be house poor if you stretch yourself to far.

Answer 2

Well you have to remember as a tenant there are things that you don't pay for that you would if you owned the home. So if you were paying about 1100/mn in rent currently on the surface with a fixed payment over 30 years at 7.5% you could afford a 165K home. Unfortunately you have to take into consideration things like taxes, insurance and in some places water, sewer, etc the small things that tenants don't pay. Oh and don't forget maintenance. So a good rule of thumb in the average state (not TX, FL, NY, or other states where taxes or insurance are insane) but in this price range I would average about 300/mn in extra expenses so let's say $350. So let's subtract that from 1100 that leaves 750 a month. So figuring that as payment you'd be looking about 100,000 home. Don't forget money for your downpayment of course. So minus the down you could probably comfortably pay about 100K to 110K for a home. Oh but that doesn't take into consideration any special assessement or rehab that needs to be done. So basically make sure you have at least 6 months worth of house payments saved up after your costs of moving in, closing, purchase, etc to play it safe.

Answer 3

It depends on how much you've got for a down payment, if you can get a WHEDA loan (for first time home buyers) and what the price of the house you're getting is.

I put down $5,000 (the price of a used car) and that covered the paperwork and everything actually--my payments came to $400 per month for mortgage (which includes the property tax figure so that's collected automatically before the end of the year, bit by bit) and the mortgage actually went DOWN after the city assessor came by and found that the upstairs wasn't as large as the downstairs (the ceiling sloped in) so he put the value of the house down, which reduced the mortgage amount i needed to pay.

Over the years the value of the house rose, but our mortgage still is only $364 a month. WAY less than renting! We started with a 30 year mortgage, then refinanced when the prime rate went down two points, shifting it over into a 15 year mortgage at 7.75%. Saved me a bundle!!!

Answer 4

That SO depends on where you live and what kind of house. Please elaborate.

Like a $400,000 home here in Missouri is like a mansion, but an average home in D.C.