How much should I spend on a home?

Question

I make $33,000 a year but only bring home $2,000 a month. I have $25,000 in student loans and pay $250.00 a month. I owe $6,000 on my car and pay $150.00 a month. My car insurance is $250.00 a month. and my rent is $535.00 a month my electric and internet are $100.00 a month. I spend about $200.00 a month on food. I'm single just finished college, no kids and an accountant. How much should I spend on a house?

Answer 1

It depends on where you live but it sound like you are a first time potential home buyer so check out the attached website you may qualify to have the government help you with the down payment as long as you do not owe them and this goes for any one. Look under nine steps to buying a home and click on learn about home buying programs hope that helps.

Answer 2

My best friend is in the same boat as you, only she forgot about student loans until after she bought the house and is now screwed.  Make sure that the home you buy will always fit in your budget!  Homes are cheap right now and you can get some nice ones in your range.  Don't automatically think that a higher priced home is going to be any better than a lower priced one, also the area has a lot to do with the price.  A home no more than 70,000 should be a good start for you, maybe even lower.  Find something that you can play with and enjoy for a while and afford if something else pops up.  Cars break down and water pipes break, if you have money to cover all those issues if they occur, along with your mortgage then you should be okay.  But, DON"T budget yourself so much into a corner that you can't vacation and enjoy life.  Then you will feel totally tied to your home and will resent it in the end.  Have fun!

Answer 3

i would look into purchasing a town house or condominium.  Much cheaper and easier to maintain.  

If your credit is good you can get into a descent to nice condo for close to what you are paying in rent.

Answer 4

Stay in your rental because your rent is low enough for you to focus on paying down all your debt first, i.e. student and car loans.  Make this your first priority before shopping for a home.  It is important to begin a mortgage debt free that way a banker (go to a mainstream bank not a small mortgage company) will allow you more money to mortgage which means a more quality home.  A banker will pre-qualify you before you begin home shopping.  Whatever amount you are told you can afford, listen to the person who is loaning you the money not the person who is selling you the home.

Some important considerations for shopping for a home:

It is true what is said about LOCATION, LOCATION, LOCATION and a desired school district.  Take into consideration what surrounds the home as well, such as state parks or industry/potentially toxic environment.

Instead of asking how much to spend on a house.  Work backwards, remember to budget in real estate taxes, homeowners and automobile insurances, is the house heated by gas or electric, is it ALL electric (run do not walk from this house) ask the current owner to provide copies of their utility bills (you should request written not verbal proof), phone/cable/internet, groceries, vehicle gasoline, monthly entertainment=movies, restaurants, and misc. expenses i.e. clothing, home and/or vehicle repairs, gifts and/or whatever you usually charge on a credit card and finally monthly money to deposit into a savings account and a 401K/retirement investment.  After considering all these monthly bills, ask yourself what amount remains for a mortgage payment?

All work and no play makes a depressed individual,ha.  You do not want to financially strap yourself.  This is why I stress to you again for you to focus on eliminating your current debt.  Realisticaly, I hope this helps you.

Answer 5

And don't forget that even if you get a fixed rate, your payment will still go up a little each year.

Answer 6

28% of you income is a standard. Mortgage of $770/month=home approximately $80,000.

Answer 7

Yes 28% of your income is what a lender will calculate as your maximum affordable monthly payment.  However, it is up to you if you want to commit that much to your monthly payment.  Also take into consideration that a lender will not allow you to go over 38% for mortgage and loan repayments, so you will be held to a monthly mortgage of $645.  

Answer 8

you will never get approved for a mortgage with all that debt - you will have to pay off ALL the school loan first and you'll have to save money for a down payment and closing costs - figure 105 once you get out of debt - figure a house priced at 2.5-3 times your annual salary at that point in time - any more and you'll be putting yourself at risk

Answer 9

Without doing math- you can probably afford something around $100,000-$140,000.  You need to take your monthly take home and subtract your monthly bills to see how much mortgage you can afford.  Talk to a mortgage broker and ask for a Pre-Qualified loan.  They will check your credit and see where you owe what and tell you how much you can spend.  As a single- you could purchase a nice townhome.  

Answer 10

I ran some numbers in the following link.  I assumed that you would be paying about $2,000 per year in property taxes and could get a 6% mortgage with a 30 repayment schedule.  With your $400 per month debt payments on your student loans and car, you qualify for about a $70,000 mortgage.  Depending on how much you have saved for a down payment and where you live, that might not be enough to buy even a starter home.

On the brighter side, once you pay off your debt, you will qualify for about a $100,000 mortgage.  That, plus the normal increases in salary you should be getting as your career advances, should eventually allow you to buy a decent home.