topic Re: How much home can I afford? in Mortgage Loans

How much home can I afford?

lundungurl — Fri, 10 Feb 2012 18:06:58 GMT

Hi all,

Soon I want to apply for USDA direct loan and I was wondering if anyone knows how they calculate how much home you can afford. Here's some base figure about me: Annual income 40,000 /yr, 3 people in the household, no other income, $25 /mo credit card payment, $250 /mo vehicle payment which will be almost payed off before I try and qualify. I would like to get a 33yr mortgage, $2,000 / yr property taxes? My w-2 shows income of $44,000 last year due to overtime that is pretty regular and 3% pay increase every yr (I can document that). Anyway, just looking for a figure if anyone wants to throw one out there. I'm not sure how they calculate how much you can afford. Thanks

Re: How much home can I afford?

MBOhio2 — Fri, 10 Feb 2012 19:44:02 GMT

I think this calculator is very accurate:

http://cgi.money.cnn.com/tools/mortgagecalc/

Re: How much home can I afford?

namvet — Fri, 10 Feb 2012 20:00:33 GMT

@lundungurl wrote:
Hi all,
Soon I want to apply for USDA direct loan and I was wondering if anyone knows how they calculate how much home you can afford. Here's some base figure about me: Annual income 40,000 /yr, 3 people in the household, no other income, $25 /mo credit card payment, $250 /mo vehicle payment which will be almost payed off before I try and qualify. I would like to get a 33yr mortgage, $2,000 / yr property taxes? My w-2 shows income of $44,000 last year due to overtime that is pretty regular and 3% pay increase every yr (I can document that). Anyway, just looking for a figure if anyone wants to throw one out there. I'm not sure how they calculate how much you can afford. Thanks
The conservative approach is 28% of your GROSS monthly incl taxes and insurance for your mortgage payment. Add your monthly debts (cc,installment loans,car payments etc) to the proposed mortgage payment and this amount should not exceed 36% of the above mentioned income. This is your safest bet for not being "house poor". With good scores and cash reserves you may qualify for 33/42 ratios on DTI. You do the math!

Re: How much home can I afford?

wednesdayaddamsd — Fri, 10 Feb 2012 20:25:11 GMT

You will first need to see if your income qualifies. Go to this site:

http://www.rurdev.usda.gov/HSF-Direct_Income_Limits.html

You will then go to the handbook (chapter 4).

http://www.rurdev.usda.gov/Handbooks.html

If you are considered "low" income then your mortgage payment (piti) cannot exceed 33% of your income, with your total debt not to exceed 41%.

Piti calculator:

http://www.realestateabc.com/calculators/PITI.htm

google is a very good source of information, so read everything you can. Good luck!

Re: How much home can I afford?

namvet — Fri, 10 Feb 2012 20:29:26 GMT

@wednesdayaddamsd wrote:
You will first need to see if your income qualifies. Go to this site:

http://www.rurdev.usda.gov/HSF-Direct_Income_Limits.html

You will then go to the handbook (chapter 4).

http://www.rurdev.usda.gov/Handbooks.html

If you are considered "low" income then your mortgage payment (piti) cannot exceed 33% of your income, with your total debt not to exceed 41%.

Piti calculator:

http://www.realestateabc.com/calculators/PITI.htm

google is a very good source of information, so read everything you can. Good luck!

Google may be a good source of information but it would be advised to discuss qualifications with a professional. It's free so give one a call.

Re: How much home can I afford?

lundungurl — Fri, 10 Feb 2012 20:39:14 GMT

Thanks! A bunch of great resources

Re: How much home can I afford?

wednesdayaddamsd — Fri, 10 Feb 2012 22:03:22 GMT

You're welcome! I am closing next month with a USDA Direct 502 mortgage so I am very familiar with it. Google will help you find resources, as long as they come from the Rural Development/USDA website itself you will be fine. I had very specific questions and google helped me to find them within the USDA's websites.

Good luck!