How much of a home am i allowed to buy if i make $65,000 a year.

Question

How much of a home am i allowed to buy if i make $65,000 a year.

Answer 1

Depends if you are the only one that will buy the home. If you are the only one that will be the home, you should answer three questions. 1. What interest rates are the banks giving you based on the amount of money down you are putting in now and the timespan of the mortgage. Traditional financial thought will lead you to the conclusion that a bank will offer you a lower interest rate if you will put down a higher percentage of the price upfront than if you paid less. This is because the risk is less. You also have to consider what the federal reserve is more likely to do in the future and the future outlook of prices. Basicly its best to lock your mortgage to a fixed rate so you don't get blindsided when the federal reserve decides to raise interest rates.

Answer 2

Probably most mortgagers would loan what you need on any home up to $290-300,000. The bigger your down-payment is, of course, the happier they'd be. In fact, if you have lots of savings and investments, you might be able to buy a home or condo with a line of credit instead of a mortgage.

Answer 3

The best rule of thumb is that your mortgage should never exceed twice your annual before-tax income.  So if you make $65,000 a year before taxes, you could get a mortgage for $130,000.  If you go higher than that, you run the risk of getting into financial trouble.  Don't let people say "oh you have no debt, you can get $300,000 no problem".  That is a line of BS.  Keep in mind that you need to think of the future...you will have home repairs to do like a furnace, possibly appliances, etc.  Plus if you don't have a car note at this time, 2 years down the road you might need one and then you are screwed if you over extend yourself.

Answer 4

It's not a question of how much a bank will loan you (they often loan more than you can afford which is how we got into the mess we're in now), it's how much you can afford to pay on a monthly basis according to your own budget, which is something only you can answer.

Answer 5

Ask your bank to prequalify you for a loan.  Then look for a house 20 percent or more below what they say, if you want to still have money to enjoy life.

Answer 6

Based on my personal experience I gave A W a vote.

Get pre-approved, and figure the down payment required plus closing costs would be the minimum cash you need.  Any additional cash you can come up with will determine your upper limit.

Better to start out within your means and build equity, than to go overboard and lose it all (like so many have done lately).