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## How much home can I afford?

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New Contributor

## How much home can I afford?

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

Starting FICO's (9/26/2011) EX 586, EQ 575, TU 584
Goal: 650 across the board
Message 1 of 7
6 REPLIES 6
Established Contributor

## Re: How much home can I afford?

I think this calculator is very accurate:

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

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
Message 2 of 7
Established Contributor

## Re: How much home can I afford?

@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!

Message 3 of 7
Regular Contributor

## Re: How much home can I afford?

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!

Amex PRG. Amex Blue. Amex ED. Cap 1 Quiksilver. Saks Fifth Avenue. Neiman Marcus. Grandin Road. Target Red Card. Barclay Rewards. Home Depot. Paypal BML. Affirm. Victoria's Secret. Care Credit. Lumber Liquidators. Art Van. Evine. Firestone. Discount Tire. Discover IT.
Message 4 of 7
Established Contributor

## Re: How much home can I afford?

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.

Message 5 of 7
New Contributor

## Re: How much home can I afford?

Thanks! A bunch of great resources

Starting FICO's (9/26/2011) EX 586, EQ 575, TU 584
Goal: 650 across the board
Message 6 of 7
Regular Contributor

## Re: How much home can I afford?

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!

Amex PRG. Amex Blue. Amex ED. Cap 1 Quiksilver. Saks Fifth Avenue. Neiman Marcus. Grandin Road. Target Red Card. Barclay Rewards. Home Depot. Paypal BML. Affirm. Victoria's Secret. Care Credit. Lumber Liquidators. Art Van. Evine. Firestone. Discount Tire. Discover IT.
Message 7 of 7
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