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Started By
Message
How much house can 140K/year salary buy with 4% 30yr?
Posted on 6/17/14 at 10:26 am
Posted on 6/17/14 at 10:26 am
Between the wife and I, we are looking at about 140K. mid 20s, no kids, she has about 30K left in student loans (we have paid off 11K in the past 5 months). No major bills other than the usual. Those online calculators tend of overshoot the numbers a bit so I was wondering what price range of a house we should target.
Mandeville area so prices are a little higher than normal. The subdivisions we are looking at are in the $300k range, but I'm not sure if that is a good range for us.
We are new to this so any help is appreciated
Mandeville area so prices are a little higher than normal. The subdivisions we are looking at are in the $300k range, but I'm not sure if that is a good range for us.
We are new to this so any help is appreciated
14
Posted on 6/17/14 at 10:33 am to CrackingCodes
Depends on what you are comfortable with. Payment to income ratio is sometimes allowed up to 29% with debt to income ratio up to 41%. Everybody on here (myself included) will say that is too high. I say 20% PTI max.
140k per year / 12 = $11,666 per month X 20% = $2,333 per month
You also have to factor in taxes and insurance (no clue what yours will be...depends on parish, flood zone, etc). Let's call it $1900 that you can allot towards the principal and interest mortgage payment without factoring in escrow.
$1900 per month @ 4% for 30 years says you can purchase a $397,000 house maximum.
Obviously these are rough figures and assuming a few things.
Edit: 15% PTI, which is alot more conservative, would be right in the $300k home price.
140k per year / 12 = $11,666 per month X 20% = $2,333 per month
You also have to factor in taxes and insurance (no clue what yours will be...depends on parish, flood zone, etc). Let's call it $1900 that you can allot towards the principal and interest mortgage payment without factoring in escrow.
$1900 per month @ 4% for 30 years says you can purchase a $397,000 house maximum.
Obviously these are rough figures and assuming a few things.
Edit: 15% PTI, which is alot more conservative, would be right in the $300k home price.
This post was edited on 6/17/14 at 10:37 am
Posted on 6/17/14 at 10:47 am to CrackingCodes
I think the rule of thumb is you can afford 2.5x your annual salary.
Posted on 6/17/14 at 10:49 am to mglsu21
This is exactly the kind of analysis I was looking for. Thank you so much! It appears that the 300K range is suitable; had no idea it would be on the conservative side.
I appreciate your info
I appreciate your info
Posted on 6/17/14 at 10:55 am to CrackingCodes
No problem at all.
Just to give you a reference, my income differs each year because I get paid on commission. Over the past 4 years, my PTI ranges between 11.6% and 16.6%. I made a point to buy a house that keeps me down in the comfortable range, even though my mortgage lender would've allowed a home that was nearly twice the cost.
Just to give you a reference, my income differs each year because I get paid on commission. Over the past 4 years, my PTI ranges between 11.6% and 16.6%. I made a point to buy a house that keeps me down in the comfortable range, even though my mortgage lender would've allowed a home that was nearly twice the cost.
Posted on 6/17/14 at 11:03 am to TJG210
quote:
I think the rule of thumb is you can afford 2.5x your annual salary.
Very good rule of thumb with the rates low like they are now. If they ever go back 6% or higher then 2.5x will be too high.
Posted on 6/17/14 at 11:09 am to CrackingCodes
quote:
Mandeville area so prices are a little higher than normal. The subdivisions we are looking at are in the $300k range,
I think $300K is well within your range, provided you have a full downpayment. If not you may wish to consider laying back on prepaying the student loans until you do (unless those rates are really high).
Posted on 6/17/14 at 11:33 am to TJG210
quote:
I think the rule of thumb is you can afford 2.5x your annual salary.
I've always heard 3.5x annual salary. I'm much closer to 3.5 and don't feel too stretched. That's with 60k in student loans left too.
Seems like 140k should easily be able to afford a 300k house unless other debt is out of control.
Posted on 6/17/14 at 11:59 am to CrackingCodes
Depending on credit/debt you'll qualify for as much as 560k.
This post was edited on 6/17/14 at 12:03 pm
Posted on 6/17/14 at 12:09 pm to CrackingCodes
What you think you want in a fist house will not be what you want in the second. Buy a home that will have good resale, you will more than likely be looking to move in 5 years. Also, being in your mid 20's don't get a big yard with lots of upkeep, unless you are paying someone. Live cheap and spend some time enjoying life before the fist kid comes...
Posted on 6/17/14 at 12:09 pm to CrackingCodes
quote:
Between the wife and I, we are looking at about 140K. mid 20s, no kids, she has about 30K left in student loans
just make sure you can afford the note on your income alone should you choose she stay home with kids. Not sure of prop taxes/insurance costs in that area, but yo are looking at $2100/mo+ for a $300,000 house
Posted on 6/17/14 at 12:28 pm to CrackingCodes
Congrats on the nice financial situation. Having options is a good thing.
Today... 300K should be no issue. But are you in positions that will have large increases in salary? Do you want to have kids down the road? Do you want to be young and kid free in kid-maxed Mandeville?
There is something to be said for buying a house now with the intention of living in it for many years... but kids and age change everything.
Don't worry about the financial calcs. Know you can afford most anything reasonable right now, be conservative, and get what you feel is best. =)
Today... 300K should be no issue. But are you in positions that will have large increases in salary? Do you want to have kids down the road? Do you want to be young and kid free in kid-maxed Mandeville?
There is something to be said for buying a house now with the intention of living in it for many years... but kids and age change everything.
Don't worry about the financial calcs. Know you can afford most anything reasonable right now, be conservative, and get what you feel is best. =)
Posted on 6/17/14 at 12:57 pm to wickowick
quote:
Buy a home that will have good resale, you will more than likely be looking to move in 5 years. Also, being in your mid 20's don't get a big yard with lots of upkeep, unless you are paying someone. Live cheap and spend some time enjoying life before the fist kid comes...
This man speaks the troof
Posted on 6/17/14 at 2:00 pm to CrackingCodes
You shouldn't buy a house until you have kids. Rent. It makes more financial sense and you have no responsibility, no costs for a new toilet, damage repair, roofing, new AC or all the other bullshite that comes up.
Posted on 6/17/14 at 2:05 pm to cwill
quote:
You shouldn't buy a house until you have kids. Rent. It makes more financial sense and you have no responsibility, no costs for a new toilet, damage repair, roofing, new AC or all the other bullshite that comes up.
Great idea. Pay someone else's mortgage and get zero return on your monthly rent payment on the possibility that stuff might break in the few years before you have kids.
Posted on 6/17/14 at 2:08 pm to CrackingCodes
My house is 2.25 X my yearly salary. Feels comfortable. My wife works and that is not included. I feel that if for some reason disaster struck, we could manage our house payment.
Posted on 6/17/14 at 2:17 pm to LNCHBOX
quote:
Great idea. Pay someone else's mortgage and get zero return on your monthly rent payment on the possibility that stuff might break in the few years before you have kids.
Especially while rates are still historically low and you are building more equity quickly. OP sounds like he is financially responsible and is preparing himself well for the financial responsibilities of owning a home. No reason why he should wait to buy a house, if he is ready to do so.
I know just as well as the next guy that home ownership consists of more expenses than just principal+interest+escrow, but when I can go from a 1BR/1BA apt to a 3BR/2BA house while increasing my payment only $8/month (including escrow) then I am not waiting until I have kids or worrying about paying a little money to repair the toilet myself.
Posted on 6/17/14 at 2:35 pm to LNCHBOX
quote:
Great idea. Pay someone else's mortgage and get zero return on your monthly rent payment on the possibility that stuff might break in the few years before you have kids.
Provided you can get a full tax deduction on interest and taxes, provided that there are no significant major expenditures for repairs, provided that the housing market doesn't crash again, and provided they can find a willing buyer when they are wanting to sell, sure, this makes sense.
If the OP wants to buy a house, by all means... buy a house. But personal residences are no longer the slam dunk financial decision they once were.
Posted on 6/17/14 at 2:42 pm to LSUFanHouston
Also consider that you put that down payment into the market and the difference you save in rent v mtg payment...you'll make more money and you don't have the headaches and the never considered OPEX of owning a house. In my view and the views of many other that actually consider real numbers renting makes more sense. The one caveat is that maybe in the area he's buying renting isn't cheaper.
Posted on 6/17/14 at 3:03 pm to cwill
quote:
The one caveat is that maybe in the area he's buying renting isn't cheaper.
BR is definitely like that unless you're OK being in a shitty apartment, and Nola appears to be that way as well.
So obviously my views are based on my own personal situation. I know everyone's situation is different and one answer doesn't work.
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