Mortgage Loans

[Etno]

I know this isn't technically a credit question, but it does have to do with mortgage loans. I am curious what people are getting approved for with the current interest rates. 

I know the "rule of thumb" is 2-3 times your income, but when I run the numbers on that with the current interest rates it's $300 less than my rent payment.

Is 4 times your salary too much in this climate with the low interest rates? Even with no debt? I'm looking to buy a duplex, I'm not asking because I'm looking to be house poor.

[tooleman694]

With the low rates, you can do 4 times your income.

[JM-AM]

There are other things to consider. Your credit, work history, what your income is, etc etc. going 4 times your income is a bad situation in my opinion.

If you lose your job or self employed business slows down can put you in a tight payment situation.

When you get pre approved they will let you know how much.

[MovingForward_2012]

I am purchasing a home at 3.7 times my salary at a price of $347,900 and I make $96,000 a year. Typically, you can get approved for 4 times your salary today given the low interest rates. As the rates rise, home affordability will go down. Just realize that the less you make, the more burdensome a home at 4 times your salary is going to be.

[tooleman694]

+1

Also anyone who loses their job is going to have trouble paying their mortgage even at 50 percent DTI or 30 percent.. unless you have a nice savings account.

[JM-AM]

Biggest thing most forget when figuring out the payment is to add taxes and insurance and PMI. That 300 dollars they feel they are saving will not be realistic once you really know the payment

[MovingForward_2012]

Yep my monthly payment for the $347,900 home I am purchasing will be $2460 a month and that includes property taxes, mortgage insurance, and homeowners insurance. My interest rate is 4.125% and the mortgage insurance alone is $346 a month. HOA dues are not included and are $73 a month. I bring in $5400 a month after taxes and gross is $8000 a month. I can't wait for the mortgage insurance to drop off when the loan balance is 78% of the original appraised value. What's nice is I have a Flexible Spending Account so all my medical and dental expenses are already paid for each year.

I am going aggressive to take advantage of locking in a 30 year fixed at these historically low rates plus it is our family's dream home! The max we were approved for was $360,000.

[MovingForward_2012]

The other nice thing is I will get an estimated $3600 back from the IRS every year for writing off the interest and property taxes so that is about $300 a month off the mortgage payment. So after about 5 years when the mortgage insurance drops off, the monthly mortgage payment will be more like $1814 a month! Can't wait for that!

[tooleman694]

The home we are buying is 300k. I only bring in 100k gross.

Our mortgage payment is gonna be 2k a month including everything.

[Etno]

Wow, thanks for all the quick responses! We make 48k in verifiable income, we do make some on the side in the form of an internet business we've had for a few years, but they won't count that. Normally I wouldn't buy a house 4 times our salary, but we found a duplex for 190k and one side is already rented. Single family homes in our area in a safe neighborhood start at 150k, so this really isn't that much more considering half of it is already rented. We will not be paying mortgage insurance and we have no debt.

Thanks again, I hope I'm not out of our range here!