Am I dreaming or is a 400K house doable on 100K salary?

[Anonymous]

I recently graduated with my PhD and started working about 4 years ago. We live in a high cost of living area in the northeast (Philadelphia Area). We have been looking for a house for the past year and could not find anything decent. Any decent housing in a good school district is north of $400K (This is for a 2000sq house). Even townhomes are going for $350K. I make 100K and my wife is currently working part-time but her salary in going toward paying her tuition and fees. She went back to school for a career change. In a couple years when she is out, she will be making around $50K to $70K. We are planning on buying just on my salary for both of us and 2 kids. Is this doable? Can we get approved? And are people doing this? Can people share their experience?

Below are my stats

1. Mortgage Credit Scores:790 Middle Score
2. Credit Negatives:None
3. Gross Income: 100K + 10% Bonus/year
4. Source of income: Full time employment
5. Monthly debt payments: 100/ month on 9K left on my student loan. No car debt. We bought a couple new cars in 2016 and aid them off. We plan on keeping them for the next 7 years.
6. Employment: 3 years with employer
7. Assets/Reserves: 25K in saving and 61K in 401K (Will not touch)
8. Location:Greater Philadelphia Area, PA
9. Property Description:Single Detached or Duplex (New)
10. Property Value: 400K 

[CreditCuriosity]

Yes it is doable.. All comes down to DTI ratio and that is flexible as well.. As long as you don't have large carpayments/sl payments which i didn't really see other than SL payments your DTI should be within the threshold for just glancing over it and your mortgage score appears to be excellent.  I will let the mortgage experts pipe in here, but i dont see why not although haven't done the calculation, but you like fine just doing #'s through my head and what i paid for my house and my income along with quite a large car payment i had and had no issue at 300k granted make a bit more but offset by car, etc..  DTI is what they will be looking for and usually the magical number is around 43% or less

[Mortgage-Specialist]

How much are typical annual property taxes for homes in your desired are? How much is typical annual homeowners insurance?

Lastly, your credit report shows that your only monthly debt is $100 per month??

[VALoanMaster]

Hi ProudTox2014,

Based on the info you've provided, you'll have no trouble qualifying for a conventional mortgage for $420,000 +/- on just your income.

The real question is are you comfortable with a $3,700 + monthly payment?

[Anonymous]

Taxes are around $4.8 to $5K where I was looking

[Anonymous]

I pay monthly $100 but it is more like $70 on the credit report. I'm planning on paying this with my bonus this year. Probably next month. I don't have any other debt. Both our cars are paid off. All bought new in 2016 so can last for the next 7 years. We are minimalist

[VALoanMaster]

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@Anonymous wrote:

Taxes are around $4.8 to $5K where I was looking

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I used a purchase price of $420,000 with 5% down (could be as low as 3%) and taxes at $5,400 per year & your ratios were under the max allowed on a conventional loan.

[Mortgage-Specialist]

If you're looking at a $400k home and you put down 38k - assuming property taxes are 5k per year and home insurance is 1800 per year your total payment on a 30 year fixed should be under $2,600 per month. This is based on today's rates. Hopefully they dont get too high by next year. Your debt ratio is only shade below 32% which is pretty good. This means you can afford a lot more house if you wanted to.

[Mortgage-Specialist]

At 420k with 5% down, your total payment including PITI should be under $2,800

[VALoanMaster]

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@Mortgage-Specialist wrote:
At 420k with 5% down, your total payment including PITI should be under $2,800

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Yeah, I had it in as a 15 year fixed by mistake.