For an example calculation, lets assume you have a very good credit score, and you have a $60,000 annual income, $250 in monthly debt payments, $20,000 to use as a down payment, property taxes of 1.25% of the purchase price you can qualify for and annual homeowner's insurance premiums of about 0.5% of the home's value. Show
With a 4% mortgage interest rate and a 30-year mortgage term, and using a 28% housing ratio, this means you can utilize $1,400 per month for Principal, Interest, Taxes and Insurance; with your down payment of just 8.89% of the home purchase price, Private Mortgage Insurance costs will also be included in that $1,400 figure. $1,400 per month qualifies to borrow a loan amount of $204,913; add your $20,000 down payment to this, and you can purchase a home of $224,913. Of course, you’ll still need cash for reserves and to cover the loan’s closing costs. Your debt-to-income ratio as a percentage of your income is low enough so that the back-end "cap" of 36% of your gross monthly income doesn't come into play. In fact, the 36% cap means you can carry as much as $400 per month in debts and still qualify for the amount above. If your DTI is above 36%, don't worry. Fannie Mae and Freddie Mac are now backing loans for borrowers with back-end debt ratios of as much as 50%. While less debt is better, more doesn't necessarily mean you can't qualify for a mortgage large enough to buy a great piece of real estate that you can call home. You can afford a home up to: $351,847 Monthly payment: $2,250 Debt-to-income ratio 36% Affordable Stretching Aggressive *Debt-to-income affects how much you can borrow The debt-to-income ratio (DTI) is your minimum monthly debt divided by your gross monthly income. The lower your DTI, the more you can borrow and the more options you’ll have.
The above estimates do not include amounts for: (1) private mortgage insurance (PMI), which may be required if your down payment is less than 20%; (2) mortgage insurance premiums (MIP), which may be required for FHA-insured loans; or (3) homeowner’s insurance. These costs may be significant and may affect your affordability, debt-to-income ratio or monthly payment. How much house can I afford?To know how much house you can afford, an affordability calculator can help. Getting pre-approved for a loan can help you find out how much you’re qualified to borrow. But remember that when it comes to affordability, the amount a lender will lend you and the amount you can comfortably pay without stretching your budget too thin could be very different. One influential factor in determining the amount of money you can borrow on a home loan is your debt-to-income (DTI) ratio. It is recommended that your DTI should be less than 36% to ensure that you have some padding on your monthly spend. A good DTI greatly impacts your ability to get pre-qualified for a mortgage. Ultimately, you have the final say in what you’re comfortable spending on a home. A lender’s assessment is important, but in the end, you’ll need to take a look at your income, expenses and savings priorities to truly understand what fits comfortably within your budget. Affordability GuidelinesWhile every person’s situation is different (and some loans may have different guidelines), here are the generally recommended guidelines based on your gross monthly income (that’s before taxes): Your mortgage payment should be 28% or less.
Factors that affect your affordabilityHow much you can afford to spend on a home depends on several factors, including these primary factors: you and your co-borrower’s annual income, down payment, and location (which is a primary factor in determining your interest rate and property tax). IncomeThis one’s a no-brainer. Income should include your co-borrower’s income if you’re buying the home together. DebtsYour debts directly affect your affordability, since it’s based on the ratio between what you earn (income) and what you owe (debts). InterestBelieve it or not, the interest rate you pay can make a big difference in how much home you can afford. Rates vary based on your location, which can affect your affordability. Credit scoreYour credit score plays a big role in the interest rate you’ll get for your loan. Down paymentYour down payment plays a big part in your affordability. The more you put down, the lower your monthly payment will be. SavingsHomeownership comes with costs that rentals do not. So remember to put extra money away for repairs and maintenance.
What size house can I afford based on salary?To calculate 'how much house can I afford,' a good rule of thumb is using the 28/36 rule, which states that you shouldn't spend more than 28% of your gross, or pre-tax, monthly income on home-related costs and no more than 36% on total debts, including your mortgage, credit cards and other loans, like auto and student ...
What income is needed for a 400k mortgage?What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your monthly income should be at least $8200 and your monthly payments on existing debt should not exceed $981.
How much income do you need to buy a 600k house?You need to make $222,019 a year to afford a 600k mortgage. We base the income you need on a 600k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $18,502. The monthly payment on a 600k mortgage is $4,440.
How much do you have to make a year to afford a $500000 house?Generally speaking, mortgage lenders say that you can afford to buy a house that's 2.5 to 3 times greater than your annual salary. So in order to buy a $500,000 house, you would need to make at least $167,000 to meet the 2.5x income requirement.
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What size mortgage can i get on my salary
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