Please help me figure out how much mortgage I can afford for a first time buyer?
by Mortgage Rates on Friday, October 15th, 2010 | 5 Comments
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the usual is two months take home pay for mortgage/rent etc.
I used $600 as the P & I portion of the payment in order to leave about $200 per month to cover taxes, insurance, and PMI.
On a 15 yr fixed @ 6% you can finance about $71K. On a 30 yr fixed @ 6%, you can finance about $100K.
Using 5% interest rate (fixed), the 15 yr amount is $76K and 30 yr is $112K.
Good luck finding that in Denver!
Whatever you figure out, your “rent/mortgage” payment should NOT exceed 25% of your monthly “take home” (net) pay, and the mortgage term should NOT exceed 15 years.
If it’s more than 25%, or if you can’t make it be 25% unless you extend to 30 years … YOU’RE FUCKINGUP.
If you make 32K a year, let’s assume at least a 10% tax … making your yearly take-home pay $28,800 … divided by 12 = $2,400 a month … divided by 4 = $600 on housing. 600 x 12 = $7,200 x 15 years = $108,000 … more or less …
Your question is very generic. The good old days are over when you can calculate your loan amount by some numbers in the air. Nowadays, lenders check you upside down…your last 2 yrs income, how long you have been in the profession, job security, your assets, expenses, and alot of other variables to do the calculation. Lastly, no lender will give you any loan with 0 down payment and if anybody or any lender tells you I can get you a loan with 0 down….run away from that person as it is just not possible. One other thing, no one gives you any interest rate on prime, it is always prime plus something. Do alot more reading and studying prior to jumping in buying a house or getting a mortgage.
With the bare minimum information that you have provided the most you would qualify for will be $100,000 with at least 5% down if not more. Once again, I am assuming alot of variables.
For every 10K that you finance, PITI (Principal, Interest, Taxes & Insurance) payment of $100. So, if you buy 50K house, payment is $500 month. If you buy an 80K house, payment of $800 a month. (this is a rule of thumb)
Your payment should not exceed 31% of your monthly gross income. (FHA standard)
Assuming gross monthly income of $2,666 (32K year) your payment should not exceed $826 month.
Average sales price for all homes in Denver, Co is $178,750. Average sale price for a 1 bedroom is $146,500. I’m sure you can find homes in the 80K price range, but will be harder to find.
Home this helps.