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Determine how much I can afford

I just got my first job out of college, could I afford 15k down with a salary of 35k a year? The following year I would be making 45k and going up another 10k the next yr. by knorr768 from Bledsoe, Texas. Aug 5th 2020 Reply

Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,431 contributions

Your question is a little vague. How much you make does not factor into what you have to put down. If you are trying to figure out what your buying power is, then it starts with current income. Underwriters really don't care how much you are going to make next year. It's all about last year and this year. Now don't get me wrong, the fact that you are on track to increase your income by $10 grand each over the next two years is pretty awesome, but an underwriter will only consider the NOW income. So how do you determine how much home you can buy, you must start with how much is the largest payment I will qualify for. It's actually pretty easy to determine what that is.We must assume you actually have established a good credit profile. For most first-time home buyers, underwriters will usually allow your DTI (Debt-to-Income) ratio to cap out at around 50% of your gross income. That means that for every dollar you make (before withholdings) you can only be committed to 50 cents in debt payments. If the Gross income is $35,000, 50% of that is $17,500. That's $1,458.33 per month in total debt payments. So, let's say you have a car payment of $300 and a credit card with a $25 payment and no student loan debt. That would leave $1,133.33 for your housing. This would include The payment on the note, 1/12th of the annual property taxes and insurance, plus Mortgage Insurance and HOA dues (if the property you want to buy is in an HOA) You would need to look at local data to determine what the taxes, Insurance and HOA amounts would be in the area you want to buy in. If the total housing is less that $1,133, then you should be able to afford the home. The best advice I can give is to find a local Mortgage Broker to help you with the calculations. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon, and Washington. Need help in other states? We've got you covered. NEXA Mortgage is licensed in 46 states ~ 480-889-9000.

Aug 9th 2020
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