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First time home buyer in Massachusetts/New Hampshire area. My wife and I are looking in the Massachusetts and southern New Hampshire area. Our combined income is 142K a year. Our credit scores are each above 650. The only debt we have is 8K in car loan (230/month) and 4K in student debt (100/month). Our rent is currently 3K a month and we have no issues with that. We have roughly 12k in savings and no credit card debt at all. Our goal is a home 400k-500k this spring. Any suggestions for a first time home buyer? Is our goal price reasonable based on our income? Very stable jobs with 5% raises per year and possible bonuses/stock options based on performance.
Only you know why you can really afford with other expenses the bank doesn’t look at. Do you eat out? Travel, etc. I would buy a home on one income and make sure you don’t become House poor. The bank always qualifies you for a lot. I would suggest not buying at the top end of what the bank gives.
Personally I would knock out the debt and beef up the savings. 12k in savings really isn't much. I'd save so you have 20% down on the purchase and then have a bigger cushion (like 3-6 months income saved)
Our parents are contributing 20k for down payment and closing costs if we decide to buy a home this spring as a wedding gift. I think I may try to find a 380K home in New Hampshire to get a nicer home than I could afford in Massachusetts. The only downside is paying Massachusetts income tax and New Hampshire real estate tax at the same time. New Hampshire has no income tax so they tax heavily on the real estate side. Massachusetts also charges income tax for New Hampshire residents working in Massachusetts. I’m trying to keep my monthly mortgage, insurance, and other home expenses under 2900 a month if possible. Very new to the process so I have no clue expenses come with buying a home.
You should plan to budget around 1-2% of the home's value per year for home maintenance. Obviously you don't spend that out each year, but maintenance on a home is expensive. We have income around yours and pay $2300 and that feels tight to me. No car payment or student loans but we have kids so that probably evens out to those two things.
First time home buyer in Massachusetts/New Hampshire area. My wife and I are looking in the Massachusetts and southern New Hampshire area. Our combined income is 142K a year. Our credit scores are each above 650. The only debt we have is 8K in car loan (230/month) and 4K in student debt (100/month). Our rent is currently 3K a month and we have no issues with that. We have roughly 12k in savings and no credit card debt at all. Our goal is a home 400k-500k this spring. Any suggestions for a first time home buyer? Is our goal price reasonable based on our income? Very stable jobs with 5% raises per year and possible bonuses/stock options based on performance.
Eyeballing this, you can do what you want to, and even higher (substantially). That's not to say you should move your bar higher. Figure out where you want your max payment. Then talk to a lender and ask, how much home will a payment of $XXXX get you?
Sounds like your debt-to-income ratios will not stand in your way. However, you mention 12K in savings and another 20K gift from family for down payment and closing costs. At a 400K purchase price, it sounds like you would be putting down around 5% of the purchase price. While that is completely acceptable, if your credit scores are only around 650, you really should work on getting the scores up. You will take a big "hit" to the interest rate if scores are under 700. Also, with less than 20% down, you would have PMI, which carries a higher premium for lower scores. So the question is, why are the scores so low? It could be just a short credit history, but maybe there is some older bad credit that is keeping the scores down?
I recommend working on increasing your credit score. You'll get a better interest rate and pay less over the course of the mortgage. Working on knocking out that debt, among other things, will help you with that.
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