If my average household income is about 130,000/yr with one child. What is the price of a house can i afford?

Question

Household of 3. What price range should i look at when buying the new house?

That is with all my college loans paid off.

Before taxes.

Answer 1

It's all about ratios when buying a house. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income. To calculate your housing expense, multiply your annual salary by 0.28, then divide by 12 months. So making $130k a year you could afford a $3,033 monthly payment. You will have to figure out how much house that buys based on your local property taxes and the type of mortgage you get.

Answer 2

With $130K , you should be prepared to make the 20% down payment .
Loans are either conventional ( under $417K ) or jumbo / over $417 K .
Jumbos are harder to get and carry higher interest rates .
If you look for a $500K place with 20% ( $100K) down , you should do OK .
( Is the child of school age or if 2 parents are working , will you have expensive child care ?)

ALSO , That income range may throw you into the AMT tax bracket , and home mortgage interest is Not tax deductible for AMT ( I don't think ) ,
But DO your homework on this one .

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Answer 3

There is a lot of things you should look at - the best /easiest suggestion is to find a mortgage broker or your local bank and try and get preapproved - they can run your credit- and determine your DTI( Debt to Income Ratio) - there are a ton of ways to try and determine this yourself - but most of the time you can save yourself a lot of hassle by trying to get preapproved-

If you are worried about running your credit - mortgages/auto checks aren't hard hits on your credit - unless they are run more than 3 times. The loan officer can give you a very specific price range to work with.

Also - there is a HUGE difference between prequalification and pre-approval - prequal means they've looked at your income, and are judging on the basis of your statement of your situation - the pre-approval means - credit is run - you've already got the ball running!.

Also - be sure to check out any federal/state programs in your area - there is a TON of information out there - so good luck!

Answer 4

1) It will depend on how much in debt payments you have every month, ability to document all income, credit scores for the rate you'll qualify for....etc.

2) You will likely qualify for more than you will be comfortable paying. The real decisions lie in you deciding what you are comfortable with in a fixed 30 yr payment or 15 yr if your goal is to have it paid off early. If you go into the process with the question above, you could be talked into more than you want.

The size of your household is basically irrelevant when it comes to the loan aspect. Only really pertinent when you are looking for that house with regard to rooms, amenities you want etc.

Good Luck

Answer 5

My wife and I make about $125 a year, and we have a $150,000 house. We could afford more, but this is a comfortable level for us that allows us to reamin relatively debt-free other than our mortgage. We put 20% down and will have the house paid off in about 8 to 10 years.