How do you figure out how much you can afford on a house?

Question

Hypathetically speaking: If I can gross 130000 dollars as an Air Trafic controller, could i afford a 399000 dollar house?

Answer 1

On paper, maybe.
You could afford a $3,900.00 house payment. BUT, you have to figure your debt to your income next. List your income gross, then take out taxes. Then figure out what your house payment, taxes and insurance will be. Subtract all your bills from that plus whatever you put in savings.

Basically it is easy to figure out. Most people want more than they can afford. They promise to cut out an expense here and one here. Well, that never comes to fruition. You should even figure in entertainment and vacations.

You have to be totally honest with yourself. Your income says you can afford it but your debt might say, "what were you thinking?"

Answer 2

Well, those are really big numbers. Why not break it down into numbers that are a bit easier to think about? How much do you pay on rent now? How about your utilities? How about renter's insurance?

After that, how much are you putting in savings each month toward the closing costs and down payment?

If you add all those numbers to gether (and factor in some cushion) then you should have a rough idea of how much you can afford to spend each month. From there, you can figure out how much you can afford to finance.

Not sure where you live, but we earn about $125,000 and live in a three-year old 2,100 square foot house in a gated community. We sent 150,000 on ours. Because it was pre owned, we did not have to spring for blinds, sod, a sprinkler, etc.

A $400,000 house seems very very very pricy to me.

Answer 3

Keyword any Realestate calculator.
The only problem is they don't usually figure yearly taxes and insurance into it.
My rule of thumb is figuring 1% of the house's full price as a monthly mortgage. For example your looking at paying approx. $3,990 per month.
The next rule of thumb is to net 3-4 times that amount in order to pay the usual home owner expense...utilities, maintenance, etc.

Answer 4

Figure out your gross monthly income, then divide that number by 30%. If you want to play it safe your housing exspense should be no more than 30% of your gross monthly income.

Answer 5

Hey,
What you want to do is contact a bank that handles home loans or a mortgage company. Give them your income information and they will prequalify you -giving you the amount you can spend on a home based on your income. Good Luck Home owner ship is great.

Answer 6

it is different for different states in America. Check with the bank and those who are good with those kind of things. Check with couple of people too not just ask one expert and believing 100% of what he told you. Be wise and smart

Answer 7

yes and a couple of goats to keep the grass short

Answer 8

usually it is about 1 fourth of take home pay.

Answer 9

no you would be over spending the money you make