2007-11-20 15:07:30 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
The rule of thumb is a mortgage should be between 2x and 3x your annual salary. 2x is 90,000 and 3x is 135,000. This is the mortgage portion, add your downpayment on top of that to get house price.
The person who referenced the 28/36 rule is also right. You shouldn't spend more than 28% of your gross income on your housing payment (that has to include principal, interest, taxes and insurance). This is $1050 for you. You wouldn't want your housing payment to exceed that. (The 36 part of the rule is that all of your debt payments, including your mortgage can't exceed 36% of your gross income or $1350 for you. This means if you have a $400/mo. truck payment the most you should spend on housing is now $950 instead of the $1050).
Back calculating from the $1050 per month... You have to pay insurance for the house. Since it won't be terribly expensive and isn't near the coast, figure roughly $400 per year for insurance. Since TX doesn't have a state income tax, the property taxes are generally higher. For the purpose of arguement, let's say about 1.5% per year On a $130,000 house that would be $1950 per year. So add in insurance and you are at $2450 per year or $204 per month. Subtract that from the $1050 and you get $850 per month for principal and interest. If you qualify for a decent rate (around 6% right now), the principal you can borrow with that rate works out to be ~$130,000, just like the rule of thumb says!
good luck!
2007-11-21 03:03:23 · answer #1 · answered by Rush is a band 7 · 0⤊ 0⤋
Take your gross monthly income and multiply by 0.28. This should be your comfortable total housing expense, which should account for principal, interest, taxes, and insurance (PITI) and any other housing expense such as homeowners association fees. This can be stretched a little bit under some circumstances, such as your overall debt-ratio (debt payments vs gross income including housing does not exceed 36% total.
Also, the stronger your credit the more the lender will allow as you have shown an ability to handle your finances well. Sub-prime lending often goes to a 50% overall debt ratio, but gets a lot more default than this traditional set of ratios recommends. If you are used to paying more in rent, and do well and save money, then you could be comfortable going more.
Keep in mind that with home ownership comes additional expenses - upkeep, remodeling, repairs, etc... Be sure to figure those into your budget up front
2007-11-20 23:31:47 · answer #2 · answered by walkinandrockin 3 · 0⤊ 0⤋
your morgage should only be a quarter (1/4) of your income per month. So if u make $45,000....ummmmm probably bringing home somewhere around $2,700 a month, your house should be somewhere around $235,000 or less... Nothing more than that, unless u are single and have no kids, then and only then, can u go a tad bit higher! Be smart about this decision tho... Its a big one!
2007-11-20 23:21:25 · answer #3 · answered by Sugga 1 · 0⤊ 2⤋
Check out Financial Peace University...Christian based smart spending and budgeting
2007-11-20 23:16:20 · answer #4 · answered by sajaru316 2 · 0⤊ 2⤋
It depends on your bills. $150,000 to $180,000 is my guess. or lower of course.
2007-11-20 23:11:54 · answer #5 · answered by Lisa S 4 · 0⤊ 0⤋