North Texas Real Estate and Homebuying Guide Located In "Stonebridge Ranch"

Down payment aside, brokers say you should only spend between 25 and 33% of your monthly gross (before taxes) pay on housing. This is example is here to help you figure out how much loan payment your income can carry:

Let’s say your monthly gross income is $5,000 ($60,000 annually). Divide by four ($1250) or three ($1667). Let’s say you have a car loan ($150/month) and you’re paying off a credit card balance ($100/month).

$1250-$250= $1000 or $1667-$250= $1417
In this example, you’d be able to spend between $1000 and $1417 a month on your principal and interest payments, real estate taxes, and insurance. If real estate taxes are $100/month and insurance is anoth another $50/month, that will leave you between $850 and $1267 to spend on a mortgage.

This is how to calculate the amount of the mortgage you can afford to carry:

Multiply the net amount you can spend ($850 to $1267) by twelve (for an annual mortgage amount), then divide that number by the current prevailing interest rate (say, 8 percent for a 30-year fixed-rate loan).
25% of gross income: $850 x 12 = $10,200 ÷.08 = $127,50033% of gross income: $1267 x 12 = $15,204 ÷ .08 = $190,050

So how much house can you afford?

Assume you add a 20% down payment to each of these mortgage amounts (divide $127,500 or $190,050 by 5 and add that number to the total).
$127,500 ÷ $25,500 = $153,000$190,050 ÷ 38,010 = $228,060
According to these calculations, on a $60,000/year income, assuming you have 20% to put down in cash, you’d be able to afford a home that costs between $153,00 and $228,060.
The 8% interest rate allows you to purchase a home between two and a half and nearly four times your income!

posted by Stonebridge Realty Group  # 9:26 AM