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I have another post out there with a mortgage question but I didn't want to hijack my own post. My question here (mind you I'm VERY new to home-owning), is how much can I expect to have loaned from the bank for buying a house?
I know that there's a lot of factors that play into figuring this out, but I'm trying to gauge out the the price range that my job/lifestyle can afford so I can start looking at houses.
I'm 22, have an annual salary of 44k, credit score of 731 and live in Amherst, Massachusetts.
Houses in this area range from 200k - 800k. Can I live here in the near future? What should I be doing to prepare for buying a house?
Well, there are a lot of factors and you can always go in and get pre-qualified - that way you know what you have to work with.
It's been over 12 years since we last bought our house, so I imagine things are way, way different now! But at the time, we were qualified for way more than I ever would have been comfortable with. Not wanting to be house poor, we bought well below what they would have loaned us.
I have another post out there with a mortgage question but I didn't want to hijack my own post. My question here (mind you I'm VERY new to home-owning), is how much can I expect to have loaned from the bank for buying a house?
I know that there's a lot of factors that play into figuring this out, but I'm trying to gauge out the the price range that my job/lifestyle can afford so I can start looking at houses.
I'm 22, have an annual salary of 44k, credit score of 731 and live in Amherst, Massachusetts.
Houses in this area range from 200k - 800k. Can I live here in the near future? What should I be doing to prepare for buying a house?
Thanks!
you could probably get a loan for about $200k, assuming you have no debt.
i wouldn't borrow $200k on $44k/year, personally. i wouldn't even borrow $150k on that.
At most, you can probably only borrow 3 times your annual salary - so $132k. Add to that your downpayment, closing costs, etc.
A mortgage, with PITI, for $135k will cost you around $1100/month with a 5% interest rate. Can you handle that, your other expenses, utilities, emergency fund, savings, car expenses, etc? At 44k, your take home can't be more than what?... $1500 biweekly or so? That's more than 36% of your income right there, just for your monthly mortgage payment - and homes in your area start at $200k - so unless you've got $70k for a downpayment (more than 50% of the amount you'd be borrowing), it's unlikely you will be buying right now anyway.
Get a notebook. Spend the next 30 days writing everything down - every penny you spend and on what. If you do laundry at a laundromat, add that in.
After you've kept track of what you actually spend, sit down and think of AFTER you purchase. If you do laundry at your parents, realize they (and you) might not be as comfortable with that after you're a home owner. You'll need to buy your own machines (and the soaps, etc). Do you handle your own yardwork now? If you buy a SFH, you'll either have to do it yourself (and purchase a mower, a weedwhacker, gas for those, etc) or pay someone else to do it. What would you do if the water heater breaks?
It's a lot to think about. When my SIL was 16 and wanted to move out on her own, I suggested she do something similar - only I advised HER to write down everything she used in her mom's house. After 3 days, she called crying, sure she could never move out on her own. She certainly couldn't do it and maintain her then-current standard of living. As I told her, you need to be realistic about what you're willing to give and take. No one (except those with over indulgent parents, or broke ones) start out with the same standard of living their parents currently enjoy. Some things happen over time.
Be patient. You have the rest of your life in front of you. It's good though that you're thinking about these things now and getting a handle on what you'll need for the future. Good luck to you.
Be patient. You have the rest of your life in front of you. It's good though that you're thinking about these things now and getting a handle on what you'll need for the future. Good luck to you.
Thanks for all the information and encouragement sskkc. I really appreciate it! I'm glad someone could give some perspective-- I guess it's not necessarily a race.
Even if you tell the truth about what it is? And don't have an equivalent amount sitting in a trust fund somewhere?
tell the truth about what?
i'm talking zero assets, zero debt, and $44k annual salary. Banks will loan you $200k, 100% LTV on a USDA loan, and i think it is 95% LTV on FHA loans, so you might have to save 5%.
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Isn't that what got so many in trouble just a few years ago and crying that the 'big, greedy bankers' got them in over their heads?
that has nothing to do with whether or not it is possible.
Lenders generally don't want your mortgage payment (including things like HOA fees) to be more than 28% of your gross monthly income. So on $44k a year, that gives you a rough number of $1,026 to play with.
Of course other factors (good credit score, other debt, etc...) can affect this, but that should give you a general idea.
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