How much home can we afford?

Question

What price range should we look at if the total payment per month was $1000 including the mortgage, homeowners insurance, taxes, sewer,water and trash disposal?

My husband makes $4000/month and we plan to start a family and I'm going to stay home with the kids so I won't be bringing in any income. We want to live well below our means.

We have $15,000 for a down payment.

We don't want a $4k home. We aren't looking at the MOST that we can afford, we want to live BELOW our means so that we can spend our money elsewhere (on the kids, family vacations, savings, retirement, etc)

We live in Tennessee.

Answer 1

If your husband nets 4k/month (as opposed to gross), you should be able to do about a 200-250k house. If you could put down a tad more and pay a bit more a month, you probably could go up to 300k. From a qualification standpoint, if that income is net, you probably qualify for up to 400k.

My wife and child are in a similar situation. My monthly net is probably closer to 5k, but she stays home with our baby, and we bought a house for 389k, but we pay more per month than the thousand you said you wanted to spend.

Putting down only 15k means you would be putting down about 8% of the total, so you probably will have to do 2 loans, a primary for 80%, and a 2nd for 15%. You do this to avoid paying what they call mortgage insurance (known as PMI), which is a scam basically, and expensive. As long as your main loan is not for more than 80% of it's value, you can avoid this.

Bear in mind too, if 15K is all you have period, you can't put all of that down, as you have closing costs to consider also, which can be up to 8k depending on the price, the lender and the area you live in. Most lenders do let you roll most of that into the loan, but that will bring up your monthly payment a tad.

The 2nd loan will be for a high interest rate (like 10-12%), whereas your main one can probably be around 6.5%.

As long as your credit scores are 650 or better, you should be fine.

Your PITI (principal, interest, taxes & insurance) will probably be around $1000/month, though taxes & insurance vary greatly around the US.

----------------- added later

Tennessee varies a lot in the real estate market (my wife is from there), but in general prices should be pretty good. In the rural areas, or even Knoxville, you can probably get a great house for a family for under $200k, maybe even down to $150k. I don't think that would be possible in Memphis or Nashville though.

Not sure where you live Judy, but $120k does not buy much in the housing market today. The asker is pretty limited on their down payment and how much they want to spend each month, despite being able to afford a lot more. I know because we are in a very financial situation to them, and I have bought and sold houses many times. $120k does not even by a starter home in a bad neighborhood in my town, maybe it does in yours, but I stand by my answer.

Answer 2

A 30 year, fixed rate, 7% mortgage for $120,000 would have a principal and interest payment of around $800 a month. The amount you'd owe for taxes can vary widely depending on where you live, so $200 might or might not cover taxes, insurance, sewer, water and trash disposal - those would probably be a little more, and you'll probably also have to pay PMI. Figure maybe $4000 for closing costs (could be more or less than that) out of your savings, and that would leave $11,000 toward a down payment. So a house around $130,000 or a little less would probably have a payment in the range you mention. What you can find in that range depends a lot on where you live. In some places you can get a pretty nice home for that - I hope you aren't in CA.

Good luck.

And btw, whiskeyman's advice will only get you into trouble.

Answer 3

For $one thousand/mo which entails taxes, coverage, and so on, at 6.five% 30 12 months constant, approximately $130k, this used to be headquartered on credit score rankings of 590 and 690. Call a lender and get prequalified, since the prequal might also comprise conditions comparable to might be you will have a couple of minor expenses in your credit score that have got to be paid off and eliminated out of your credit score first. Every difficulty is unique. Good good fortune.

Answer 4

So smart! IF only I could shout it from the roof here! Truly a smart person! but we need more information. You will need to describe your expenses as well as your income to be able to calculate the true picture here. If you do a search on the link below and click any listing there will be a calculator on the next page to help you or go to the second link and call a professional to help you in your state. Good luck honey-I'm not sure you will need it so much as those who don't value their money and credit as much as you do!

Answer 5

There are online caluculators and the opinions of strangers, but if you want a good answer, you should meet with a few mortgage lenders who can assess your situation and goals. They can help you figure out what you can really afford.

In my non-professional experience, a $1K/mo payment puts you in the very low 100s.

Answer 6

I would not finance more than 100K if you want to keep your payments around $1,000 a month.

We have a $150,000 home. We financed $120K and our payments (including insurance, etc.) run us about $1,000 per month, but we pay $1,200 per month to try to pay it off quickly.

We make $120K per year though. I can't imagine spending $1,000 per month if I made only $48K. That seems really steep. His take home must be below $40K.

I would not imagine you wanting to spend more than $600 or $700 per month on housing., but that is just me.