Settling on a reasonable price for a home (Austin, Howe: fit in, insurance)

[ksoviero]

I am starting to aggressively save up for my first home. However, I'm having a hard time figuring out how much I can afford to pay for a house. The online tools don't take into account the idiosyncrasies of Austin and my situation.

Bear in mind that I'm not looking for a quote, but just a ball park figure of what I should be targeting.

I'm willing and able to pay $2,500/mo for the full mortgage (that means principal, interest, PMI, property taxes, etc. all included in the $2,500/mo). My credit is poor (640) due to several medical bills that I accrued very recently (this year). However, outside of the medical bills, my credit profile is perfect. Never been late on anything. My annual income is $75K. I'd like to live in south west Austin near the intersection of Mopac/290.

Based on the metrics above, what would a ball park target be for a home?

[HappyTexan]

Conservative estimates say use 2x your annual salary for the price of a home.

[ksoviero]

Originally Posted by HappyTexan

Conservative estimates say use 2x your annual salary for the price of a home.

I'm going to assume that no one follows that, since to afford the median home price in Austin ($222,100), you would have to make $111,050/yr, which is no where near the median salary of $52,453...

[kiacook]

They do follow that - however, many people who purchase homes are couples, hence dual incomes - each making $55k per year.

[austin-steve]

Originally Posted by ksoviero

I am starting to aggressively save up for my first home. However, I'm having a hard time figuring out how much I can afford to pay for a house. The online tools don't take into account the idiosyncrasies of Austin and my situation.

Bear in mind that I'm not looking for a quote, but just a ball park figure of what I should be targeting.

I'm willing and able to pay $2,500/mo for the full mortgage (that means principal, interest, PMI, property taxes, etc. all included in the $2,500/mo). My credit is poor (640) due to several medical bills that I accrued very recently (this year). However, outside of the medical bills, my credit profile is perfect. Never been late on anything. My annual income is $75K. I'd like to live in south west Austin near the intersection of Mopac/290.

Based on the metrics above, what would a ball park target be for a home?

You're over thinking it. There are no idiosyncrasies to take into account. A house cost hat it costs.

Talk to a mortgage lender and get pre-approved. Then you'll know exactly what you qualify for. You can decide to buy less than that if you want, but you'll know your number. But you need to talk to the lender first.

With regard to saving, you'll need at least 3.5% down. There are zero down loans available in outskirt areas. But you have to take into account whether price appreciation will outstrip your rate of saving. That's the real quandary.

You'll be fine with a 640 FICO. Interest will be a bit higher, but there are loan products that you will fit into.

Good luck!

Steev

[cBach]

I thought the rule of thumb was 3x your salary.

[ksoviero]

Originally Posted by kiacook

They do follow that - however, many people who purchase homes are couples, hence dual incomes - each making $55k per year.

Actually that was median "household" incomes, not individual.

[ksoviero]

Originally Posted by austin-steve

You're over thinking it. There are no idiosyncrasies to take into account. A house cost hat it costs.

Talk to a mortgage lender and get pre-approved. Then you'll know exactly what you qualify for. You can decide to buy less than that if you want, but you'll know your number. But you need to talk to the lender first.

With regard to saving, you'll need at least 3.5% down. There are zero down loans available in outskirt areas. But you have to take into account whether price appreciation will outstrip your rate of saving. That's the real quandary.

You'll be fine with a 640 FICO. Interest will be a bit higher, but there are loan products that you will fit into.

Good luck!

Steev

I'll contact a mortgage broker and get pre-approved for an FHA loan, to see what the costs are going to be.

Thanks!

[Lowexpectations]

Fha loans are a lot more expensive than they used to be with the insurance premiums now that never go away on most of the loans


The amount you should or could spend should be in relation to your other obligations

[ksoviero]

Originally Posted by Lowexpectations

Fha loans are a lot more expensive than they used to be with the insurance premiums now that never go away on most of the loans


The amount you should or could spend should be in relation to your other obligations

I know, that's why I specifically mentioned that I'm willing and able to spend $2,500/mo. That's how much I have a month after expenses, taxes, savings, 401k, etc.