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I agree with the others. We just bought a house for $378k with 20% down and a 15 year loan. We have one car payment of $645 and $350/mo in student loans is the only other debt. Income is $160k/yr + ~$15k in bonuses split between my wife and I. We are ok right now, but definitely have to watch the budget. With your situation I wouldn't go much over $300k myself. You can always look at a house that has unfinished space or needs a little work, then you can buy at the lower price and upgrade down the line when your budget allows. That is what we normally do and it has worked very well, and you get some nice equity in the house!
My wife and I have been looking at homes in the $350k-$400k range. My base yearly salary is 68k, but after overtime I average about 84k. I also get disability from my military service which adds about 15k. Last, I recieve another $1500/month while attending college using my GI Bill to finish my degree although I don't know if I can count that as income when applying for a loan. My question is given these numbers for income, how likely am I to get approved to purchase a $400k home using my VA loan? Also, I forgot to mention that I have no other debt beside car and health insurance. (No credit cards, car payments, etc) Are me and my wife shopping outside of our price range?
I guess that means your wife has no income, correct? I would say you are pushing it if you aren't putting any money down and I wouldn't feel comfortable making payments on a 400K property with an income of around 100K/year. You never know when that OT might disappear.
For example, if I just plug numbers into a basic mortgage calculator, putting only 3% down on a 400K property with an interest rate of 4% over 30 years means payments between $1800-$1900/month for P&I plus your taxes, insurance, utilities, etc. which will be running you over 2K/month, probably closer to $2500/month. Could you easily afford that now?
I like the old metric of a house price limited to 2.5 times regular annual income.
OP, you look like a $210,000 house buyer to me. It may not be "The Dream," but it will be shelter for your family that also may not be a millstone around your neck, either.
We "qualified" for a 200k home.... but we know what we can afford and there's no way we were going to go that high even though they "said" we could. You have to figure out what you honestly can afford. How much do you want your payment to be, and stick with that.
We "qualified" for a 200k home.... but we know what we can afford and there's no way we were going to go that high even though they "said" we could. You have to figure out what you honestly can afford. How much do you want your payment to be, and stick with that.
Exactly.
When deciding on a price for our next home I used the take home pay to figure out income. "Net" is what I have to pay bills with, not "gross".
Wow, you and your fiance must have some seriously expensive cars, student loans and hobbies. Most people wouldn't be anywhere near house poor making a $2,500 to $3,000 monthly house payment (this includes taxes and insurance) on $16,667 of monthly gross income.
.
Minus taxes, minus 401k maxed out, minus health insurance, minus property taxes, minus other insurances, minus utilities, minus personal savings...minus wanting to do something in your life besides live in a house (vacation, other goals)...
Thank you everyone for the insight. I guess I'll just have to wait until I finish school and get a better job before we buy that "dream" home.
This is the right call. As another poster said you're going to be SERIOUSLY house poor with that income and that mortgage- and we don't even know what property taxes are going to be like in your area, or upkeep, maintenance, etc.
There's no need to try to keep up with the Joneses with your first house. The median first time home buyer is 33 with a $140,000 home. Even if you double this a $400K home is WAY outside of the norm. With a home at 2.6x earnings and an 84K salary (including your overtime) you should be looking at no more than $220K.
Pick up something that's more in line with your budget and allows you to put away savings, so when it's time to upgrade to your "dream home" from your "starter home" in 5-10 years you'll be well positioned to do so.
Yes, if homes were 2.5 times the areas median income then I would not be picking at realtors rates because the over all transaction would be reasonable. As it stands today you have to fight with the seller, realtor, banks, etc. Everyone wants a small forutne because of the supply and demand. It is an extremely antagonistic situation. My hope is to buy a forclosure for cheap.
In my area 2.5 times the net median income you would have to live in a slum. Its a serious problem and I am seeing its happening all over the country to any where that is not completely miserabel to live (dust bowl, hurricane ally, etc)
Quote:
Originally Posted by MikeJaquish
I like the old metric of a house price limited to 2.5 times regular annual income.
OP, you look like a $210,000 house buyer to me. It may not be "The Dream," but it will be shelter for your family that also may not be a millstone around your neck, either.
Yes, if homes were 2.5 times the areas median income then I would not be picking at realtors rates because the over all transaction would be reasonable. As it stands today you have to fight with the seller, realtor, banks, etc. Everyone wants a small forutne because of the supply and demand. It is an extremely antagonistic situation. My hope is to buy a forclosure for cheap.
In my area 2.5 times the net median income you would have to live in a slum. Its a serious problem and I am seeing its happening all over the country to any where that is not completely miserabel to live (dust bowl, hurricane ally, etc)
The fact is, the OP is considering significantly overextending himself for a "dream."
Average houses used to be 1200--1400SF, and now are what? 2600SF? Housing is shelter and ownership is an opportunity with responsibilities, and when they become something else, owning can become a terrible burden.
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