Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
28 y/o, looking to buy a detached home in the $400-500k range. Property taxes are 1.25%, no HOA or Mello Roos. My monthly income fluctuates between $4-5k depending on how much I work, and there is always work available. I'm a contractor, so nothing taken out for taxes.
At this point I have $20k saved - enough for 5% down, but by the time the home I'm looking for is actually up for sale (I'm patient and very specific in what I'm looking for), I could have 20% or more.
Anyway, I was calculating monthly mortgage payments between 30 year or 15 year fixed rate mortgages and came to realize that a bank might not be willing to lend for that much based on my current income.
On a home based at $450k (property taxes included):
30 year @ 4.125% = $2300/mo @ 5% down, $2200 @ 10% down, $2000 @ 20% down
15 year @ 3.375% = $3300 @ 5% down, $3100 @ 10% down, $2800 @ 20% down
I have excellent credit - I believe it's 720+ but been awhile since I last checked. Parents that can co-sign if need be.
If I was to submit an offer tomorrow with 5% down (conventional, I don't like the idea of permanent PMI with FHA), would I even be able to get a 30 year loan seeing as how the mortgage payment would be half my income? Where is the cutoff for the income/loan ratio? I'm aware 50% is pushing it quite a bit but I'm curious as to how much further I could possibly go.
Your math is wrong or you aren't accounting for insurance, PMI, taxes , etc. 5% down at 4.15% is going to require a little over $3,000 a month on average, higher if you live in an area with higher property taxes. $2300 would be just the mortgage.
28 y/o, looking to buy a detached home in the $400-500k range. Property taxes are 1.25%, no HOA or Mello Roos. My monthly income fluctuates between $4-5k depending on how much I work, and there is always work available. I'm a contractor, so nothing taken out for taxes.
Excuse me? I'm a contractor, and I have to pay taxes. They don't get taken out of my check, but I have to pay them quarterly.
At any rate, no bank worth its salt will give you a loan based on the information given your post.
I read somewhere that you should never spend more than 30% to 40% of your income as mortgage. 50% is cutting way too close, no matter how expensive your home is. I would feel extremely uncomfortable spending so much on a house while struggling to remain frugal (if you have any money left over to save, after maintenance costs, etc)
You still have to pay taxes on that income and you would be wise to set them aside monthly you have also neglected to add your homeowners insurance into your mortgage calculation, unless I missed it. There is no way a bank will finance you for that amount. I think the max is 20-25% of your monthly income.
No. No, no, no. This is a very bad idea. We make more than you and are house was $240,000. It is just at the limit of what we can afford. We do have two children so we have many expenses, but even if we didn't have kids - there's NO way we could afford a house that costs $150,000 more.
You will be very sorry if you try to do this.
On the other hand, I can't possibly imagine how you would be able to get approved for a loan for that amount anyway.
I think the point has already been made, but I am going to flog an expired equine here and use a baseball analogy.
Quote:
Originally Posted by GoldenKiwi
28 y/o, looking to buy a detached home in the $400-500k range. Property taxes are 1.25%, no HOA or Mello Roos. My monthly income fluctuates between $4-5k depending on how much I work, and there is always work available.
Highly variable income: strike one.
Quote:
I'm a contractor, so nothing taken out for taxes.
Non-full-time employment: strike two.
Quote:
At this point I have $20k saved - enough for 5% down, but by the time the home I'm looking for is actually up for sale (I'm patient and very specific in what I'm looking for), I could have 20% or more.
Small down payment (now): foul.
Quote:
Parents that can co-sign if need be.
Parent co-signers: strike three looking.
You're out.
Sorry, this is just not workable. It also just doesn't sound like a good idea; feels like you're trying to force the issue. Take a look at it again in a year or two.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Being house poor won't be something you will be happy being.
