HOW MUCH OF A MONTHLY HOUSE PAYMENT CAN I HANDLE??

[jamevfan]

I AM IN THE MARKET FOR A NEW HOME BEFORE THE END OF THE YR, I CURRENTLY RENT AN APARTMENT FOR 745.00 A MONTH WITH NO PROBLEM. MY MONTHLY INCOME ALONE WITH OUT MY DH IS ROUGHLY 2200.00 TAKE HOME PAY AND MY HUSBAND BRINGS HOME ANYWHERE FROM 1,000 TO 1,200 A MONTH. I RECIEVE CHILD SUPPORT IN THE AMOUNT OF 600.00 FOR MY 2 GIRLS BUT I DONT USE THAT FOR ANYTHING BUT THEM (SAVINGS ACCOUNT FOR THEM) I HAVE NO CAR PAYMENTS DUE TO BOTH OF OUR VEHICLES BEING PAID OFF, AND MIN CREDIT CARD PAYMENT OF 50.00 COMBINED AND A CONNS ACCT PAYMENT OF 106.00 HOW MUCH HOME CAN I AFFORD?

[Anonymous]

If you tell me your gross pay instead of your net, I can figure it out for you.

[jamevfan]

MY GROS IS ABOUT 3750.00 MONTH AND MY HUSBANDS IS ABOUT 1500.00 MONTH

[Anonymous]

Is your child support court ordered and will continue for the next 3 years?

How much of a downpayment are you looking at?

[Anonymous]

Gross income of 5250. Assume 41% dti = 2152 - 156 debt payment = 1996 for mortgage, interest, taxes, insurance and pmi. I did not include your child support as there are rules about how long it has to be continuing for it to be considered. 

Assuming a FHA mortgage = 250,00 with required 3.5 % down  and add back in 1.75% pmi you have mortgage of 245,250 =  principal and interest  payment of 1400. Add another 100 or so for PMI = 1500. Around here taxes and insurance would run you about 300 a month which gives you a payment of 1800. That puts you comfortably under your 1996. Adjust for your own taxes and insurance and see where you stand.

[Anonymous]

Many people have said this before, but only you can decide what you can handle.  Recent history has shown that 41% DTI is not the optimum ratio -- it is the limit of tolerable risk.  Personally, I am more confortable with a DTI around 30%.  Be prudent.  This Board is full of stories where people stretched themselves too thin and medical emergencies or employment issues forced them into BK.

[medicgrrl]

Actually for qualifying the max payment based on guidelines would be about $1625 per month.  You have to look at both the front ratio (housing) and the back ratio (debt to income)  The only time you really back your way into the payment is if someone has a large amount of debt and could not qualify for the maximum housing payment based on guidelines.

[Anonymous]

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@Anonymous wrote:

Many people have said this before, but only you can decide what you can handle.  Recent history has shown that 41% DTI is not the optimum ratio -- it is the limit of tolerable risk.  Personally, I am more confortable with a DTI around 30%.  Be prudent.  This Board is full of stories where people stretched themselves too thin and medical emergencies or employment issues forced them into BK.

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Agreed.  Just because some mortgage broker says you can afford "X" doesn't mean you can actually afford it.  

My LO told me I could afford a $1700 a month payment, There is no way I can afford that high of a payment, even with my very small DTI, there's is no way that much of a payment is feasible. 

You need to recognize what you actually feel comfortable paying.  Take everything to account, not just your debt payments, but also how much you spend on food, clothing, misc purchases,medicine, utilities, what it will be in the new house, maintaining your cars, and what will happen if one of you lose your job or ther is a medical emergency with anyone in your family.  How much you want to put into savings/emergency fund each month.  What you want to save for vacations, your children, and how much you simply want in the bank as a cushion.

There's a lot to take into consideration, not just the black and white numbers that a broker or LO will tell you you can afford.  

Message Edited by woopah on 04-08-2009 07:53 AM

[brownee]

That's a great post, woopah!

[Anonymous]

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@brownee wrote:
That's a great post, woopah!

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Thank you!