Excelsior! Academy Posted July 4, 2015 Share Posted July 4, 2015 Just curious. And no, that is not our family's personal income amount. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted July 4, 2015 Share Posted July 4, 2015 That depends on a ton of factors. Where the house is. How old the house is. What are the house prices like in the area it is located. What is the cost of living in that area. How much of a down payment do you have. How big is your family. What are the taxes in the area. How much of your income do you want to spend on housing based on your other monetary needs and wants. Are there any sort of home owner fees. How much will it cost to insure. What is the rate of the loan. 3 Quote Link to comment Share on other sites More sharing options...
AmandaVT Posted July 4, 2015 Share Posted July 4, 2015 I can't speak for everyone, but we made slightly more than that last year and we're currently shopping for houses. Our upper limit is $225,000 and we're planning on putting 20% down. We could technically afford more and got pre-approved for a fair bit higher than that, but we don't want to compromise savings goals and being able to take family vacations. Also, we live in a high property tax state and a house valued at 225k will have at least a $4k-$5k annual property tax. Get to over $300k and property taxes will be over $7000 a year. Quote Link to comment Share on other sites More sharing options...
Arcadia Posted July 4, 2015 Share Posted July 4, 2015 Before or after income tax? Also how much down payment have you (general) saved up for. If after income tax then an estimate would be ($75k/12)*30% = $1,875 max for monthly mortgage payments. My hubby was earning very close to that amount when we bought this current house. We qualified for a $408k loan but our loan is a lower amount. ETA: Ours is a one bedroom condo built in 2005. Quote Link to comment Share on other sites More sharing options...
teachermom2834 Posted July 4, 2015 Share Posted July 4, 2015 We just paid $187500 with 20% down and our payment is very comfortable. We have high student loan debt otherwise we could have afforded alot more. Taxes play a role as does downpayment. Our first home was $75000 but we had nothing to put down and financed closing and had PMI. I think our payment was as high as our current home. Having a downpayment so you don't need PMI and a good rate make a big difference. Quote Link to comment Share on other sites More sharing options...
Guest Posted July 4, 2015 Share Posted July 4, 2015 In our area, if that is the total family income and there is NO credit car or car debt? They could afford a 1000 sq foot 2 bedroom rental or condo. My husband makes between 130-150k per year (it depends on how many side jobs he has) and we live in a modest four bedroom, 1300 sq foot home that is nearly 20 years old and has needed remodeling. It sits in a nice neighborhood on a 1/4 acre lot, and we put 25% down and had no mortgage insurance. Now granted, we have a fifteen year mortgage and plenty of debt, but with so many mouths to feed, medical insurance costs, life insurance, fire and home, older vehicles needing repair, and remodel work constantly being chipped away at, the money just doesn't go that far. We are in a high cost of living area and a desirable town, though. In almost any other state we would be doing very well! ETA: We qualified for significantly more loan that we used for our home. I think most of those calculations are ridiculously generous and cash strap even a responsible family. We probably used 2/3rd the amount we qualified for and it was still tight. We were making about 80k when we moved in and every last cent was budgeted! Quote Link to comment Share on other sites More sharing options...
Guest Posted July 4, 2015 Share Posted July 4, 2015 I can't speak for everyone, but we made slightly more than that last year and we're currently shopping for houses. Our upper limit is $225,000 and we're planning on putting 20% down. We could technically afford more and got pre-approved for a fair bit higher than that, but we don't want to compromise savings goals and being able to take family vacations. Also, we live in a high property tax state and a house valued at 225k will have at least a $4k-$5k annual property tax. Get to over $300k and property taxes will be over $7000 a year. Agreed. That sounds about right for that income. Our home was $298,000 when we bought it and it wasn real squeeze, even though we qualified for much more money and put 25% down. Quote Link to comment Share on other sites More sharing options...
catz Posted July 4, 2015 Share Posted July 4, 2015 I personally think, in general, it is less than you will qualify for unless you have a large down payment in place. Banks are far too willing to loan you too much money. I think lots of people mortgaged themselves to the hilt before the big crash. What you really need is to look what your monthly payment will be with taxes, insurance, etc and see where you're at. I'd shoot not to be more than about 25% of monthly net income. I think this is a nice basic breakdown that can be useful http://fundamentalfinanceacademy.com/percentage-income-spend-housing/ I think it also depends how much other debt you carry and if you have a strong emergency fund in place. ETA - we actually are now way under 25% and we're making double mortgage payments so we're 100% debt free by the time oldest graduates. We have good retirement and savings in place. Our mortgage is our only current debt. There was not much luck involved in making this happen, but my DH's employment status has been solid, so that has been lucky. He did chose a career with strong options and even if he were laid off tomorrow, he'd have many options available to him. 4 Quote Link to comment Share on other sites More sharing options...
2squared Posted July 4, 2015 Share Posted July 4, 2015 We make around $100k, and we paid $104k for our house with a 20% down payment. Our payment is about 11% of our monthly take-home. The house needs a lot of updating, but we like the location and the lot. While I would like a nicer house, I refuse to allow our housing to be a huge chunk of our budget. I want too many other things far more than a house (retirement, college savings, vacations, kid activities, etc). Quote Link to comment Share on other sites More sharing options...
BrookValley. Posted July 4, 2015 Share Posted July 4, 2015 In our area, that would get you a crappy apartment in a very sketchy part of town. Housing costs are very high here. Quote Link to comment Share on other sites More sharing options...
SeaConquest Posted July 4, 2015 Share Posted July 4, 2015 It would get you nothing in my area. 1 Quote Link to comment Share on other sites More sharing options...
DawnM Posted July 4, 2015 Share Posted July 4, 2015 I think a general rule of thumb is to buy a house where the payments (mortgage, taxes, and insurance) equal no more than 25% of your income. There is some debate on whether that is net or gross, and some will argue that if your income is high, more than 25% is fine. And many will say that should also be on a 15 year mortgage, not a 30. I guess ultimately it depends on what you are comfortable with. Quote Link to comment Share on other sites More sharing options...
teachermom2834 Posted July 4, 2015 Share Posted July 4, 2015 On that salary we were preapproved for $200000. We asked for that to be our limit. The $187500 we paid got us 2700 sq ft w/ 4 beds/ 3 baths. We have a small lot but enough for us. Plenty of room to play, put up badminton net and there is a good sized slab used for basketball. Safe neighborhood close in to town with well maintained 1970s homes. Our house is nothing fancy. Medium quality fixtures. There are some updates needed but it is nice and livable and nothing falling apart or malfunctioning. Quote Link to comment Share on other sites More sharing options...
planner Posted July 4, 2015 Share Posted July 4, 2015 On that salary, we bought a $500,000+ home with a substantial down payment. I don't like salary vs. Home cost calculators because they can't possibly take every factor into consideration. And no, we were not house poor. We probably could have bought a $600,000 home but I didn't want to be house poor. Quote Link to comment Share on other sites More sharing options...
Tap Posted July 4, 2015 Share Posted July 4, 2015 With 2 adults and a couple of kids, I wouldn't want to finance more than 100,000 on that income. That will buy you a small condo here, not a house. As a single person, $150,000. I only do 15 year mortgages and would refuse any house that had to have mortgage insurance on it value vs. loan. Quote Link to comment Share on other sites More sharing options...
Elfknitter.# Posted July 4, 2015 Share Posted July 4, 2015 To buy a house? Nothing. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted July 4, 2015 Share Posted July 4, 2015 To buy a house? Nothing. Really? Nothing nowhere, or nothing anywhere you live? 1 Quote Link to comment Share on other sites More sharing options...
umsami Posted July 4, 2015 Share Posted July 4, 2015 My Mom's rule of thumb was always never get a mortgage for more than twice your income. That's what we've always gone by. So, 150k loan....and add in your downpayment. 6 Quote Link to comment Share on other sites More sharing options...
Joker Posted July 4, 2015 Share Posted July 4, 2015 That was our income when we bought our home years ago. We bought a $150K home (no down payment - VA loan) that is 3 BR/2BA but only 1000 sq ft. If we had bought a home where we lived before here, it would have bought us much more house. It really depends. Dh now makes a substantial amount more and we are moving out of state but we are sticking pretty close to the same amount, but it will buy us a bigger home in that area. Quote Link to comment Share on other sites More sharing options...
Elfknitter.# Posted July 4, 2015 Share Posted July 4, 2015 Really? Nothing nowhere, or nothing anywhere you live?Here where I am, to buy, nothing. This came out yesterday about housing in Coachella. About 100 miles from me but a site of an annual concert venue each April: http://www.scpr.org/news/2015/06/30/52758/affordable-housing-crisis-bleeds-into-californias/ Quote Link to comment Share on other sites More sharing options...
SeaConquest Posted July 4, 2015 Share Posted July 4, 2015 On that salary, we bought a $500,000+ home with a substantial down payment. I don't like salaried vs. Home cost calculators because they can't possibly take every factor into consideration. And no, we were not house poor. We probably could have bought a $600,000 home but I didn't want to be house poor. You must be incredibly frugal. Bravo! Quote Link to comment Share on other sites More sharing options...
Tsuga Posted July 4, 2015 Share Posted July 4, 2015 Really? Nothing nowhere, or nothing anywhere you live? Maybe they read it as, $75k for the house? Not, $75k for a mortgage? That said, California is insane. My partner just got offered relocation there. We decided it would be more financially responsible to cut our income in two, have only me work, and stay up here and move 1 hr east or south. 1 Quote Link to comment Share on other sites More sharing options...
happypamama Posted July 4, 2015 Share Posted July 4, 2015 Here, that income would get you a very nice place -- large house, quite possibly several acres of land, likely in a not-too-rural location. Maybe not all three of those things, but likely two of them. Edit: okay, realtor.com says maybe not too large a house for that money, maybe 1800-2000 square feet. But that would be in town, maybe walkable, but at least close to stuff. If you went out of town a bit, you could get more land, although the house might need some work. Quote Link to comment Share on other sites More sharing options...
Guest kolmjhtyr Posted July 4, 2015 Share Posted July 4, 2015 it is less than you will qualify for unless you have a large down payment in place. Quote Link to comment Share on other sites More sharing options...
bettyandbob Posted July 4, 2015 Share Posted July 4, 2015 This is dependent on COL for the geographical location and down payment. Basically, take that amount figure out the amount of loan you can get and then look at what's available. BTW, I never recommend getting the biggest loan for which you qualify. Once you find out how much loan you can get ask what the monthly payments would be. Think about what monthly payments you can do comfortably and ask what lisa amount for that payment. Around here, I would think that amount might get you a condo in a not great neighborhood, you might find a tiny townhouse or condo in a slightly better neighborhood, but you'd need to do the research. Quote Link to comment Share on other sites More sharing options...
LisaKinVA Posted July 4, 2015 Share Posted July 4, 2015 What you can qualify for is vastly different than what you might be able to afford. We make around that much, and our next house will probably be around $300,000 (probably less). That is our upper limit, and money will still be a bit tighter than we'd like. But, we won't have any debt, we own our cars outright, and certain expenses will peak in 2018, and should start gradually diminishing. We need the 30 year mortgage. $150,000 (the amount we could afford on a 15 year mortgage), in our area of the state's gets me an empty lot, Or an uninhabitable building. Even 1100 square foot townhouses are well over $250,000. And rents in the area are more than a mortgage. Use a spreadsheet program, and plug your income and every possible expense into it, including savings of even a nominal amount to figure out what you can afford. Don't trust the bank to determine your budget! Too many variables to get one simple answer. Quote Link to comment Share on other sites More sharing options...
jenn- Posted July 4, 2015 Share Posted July 4, 2015 My Mom's rule of thumb was always never get a mortgage for more than twice your income. That's what we've always gone by. So, 150k loan....and add in your downpayment. Using this method of budgeting, here you could easily find a 4bed 2 or 3 bath in the 2000 sq ft area on a half acre lot. Up it to the 200,000 mark and you would probably have a swimming pool as well. 1 Quote Link to comment Share on other sites More sharing options...
Carrie12345 Posted July 4, 2015 Share Posted July 4, 2015 Impossible to say in my area. Taxes could be $2,000/yr on one property or $9,000/yr+ on another. Of course they're usually higher on bigger houses, but the amount of land and whether or not it's in the Farm Act play a huge role. When I window shop for houses, taxes are the first thing I look at. You can pay down a mortgage, taxes are forever! 2 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted July 4, 2015 Share Posted July 4, 2015 Using this method of budgeting, here you could easily find a 4bed 2 or 3 bath in the 2000 sq ft area on a half acre lot. Up it to the 200,000 mark and you would probably have a swimming pool as well. My general rule of thumb is similar except I woulld not add in the down payment. I would deduct it. So on a $75000 income I would not buy a house costing more than 150k. Of course this could vary if you had a HUGE down payment BUT the bigger and more expensive the house the more taxes, I surance and upkeep, so I would not want a house I couldn't keep up on my income. 2 Quote Link to comment Share on other sites More sharing options...
DawnM Posted July 4, 2015 Share Posted July 4, 2015 I may be reading this wrong, but I thought the OP asked how much home is affordable on a 75K salary, not how much house could be bought in any specific area. Aren't we dealing with just numbers here, not location? 5 Quote Link to comment Share on other sites More sharing options...
Heatherwith4 Posted July 4, 2015 Share Posted July 4, 2015 I would be comfortable with 175k, which would get a nice place where I live. Quote Link to comment Share on other sites More sharing options...
xixstar Posted July 4, 2015 Share Posted July 4, 2015 Not $250k with no money down and 100+ years old and thus needing lots of work. I wish we had stayed with the original plan of 150-175k tops and just waited another year or two to find something we could buy. Especially since it is a high cost of living area. If we had waited we would have found something -- buying at peak bubble height there was very very little in that range (like 3-4 houses that were livable but not meeting our expectations). However, that said -- the mortgage on that priced house is the same we would be paying in rent so while the house is a drowning factor in being able to get on top of life financially, we would have been spending it anyways (though without the repairs and what not and without the tax deduction too). Did I mention high cost of living area? Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 it's going to vary according to other expenses. interest rates. down payment. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 Impossible to say in my area. Taxes could be $2,000/yr on one property or $9,000/yr+ on another. Of course they're usually higher on bigger houses, but the amount of land and whether or not it's in the Farm Act play a huge role. When I window shop for houses, taxes are the first thing I look at. You can pay down a mortgage, taxes are forever! we are in a high cola area. dh has made a habit of fighting our property taxes every year. he usually gets a reduction on the assessment. one year the reduction was so great - the county appealed to the state. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 My Mom's rule of thumb was always never get a mortgage for more than twice your income. That's what we've always gone by. So, 150k loan....and add in your downpayment. doesn't work here if you want to buy a house, you'd better be prepared to fork out. when interest rates are very low, that will increase how much house you can buy. (re: mortgage) same with size of down payment. (here, $150k would buy a no frills studio condo in an older building. the 1200sqft house up the street sold by the bank for $300K is a tear down.) Quote Link to comment Share on other sites More sharing options...
Chess Dad Posted July 4, 2015 Share Posted July 4, 2015 Good question: Here is article about Rules of Thumb when buying a home. It works wherever you live. http://wealthpilgrim.com/how-much-can-i-afford-for-a-house-a-checklist/ Home ownership is a Great American Dream! enjoy the process. :patriot: Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 Good question: Here is article about Rules of Thumb when buying a home. It works wherever you live. http://wealthpilgrim.com/how-much-can-i-afford-for-a-house-a-checklist/ Home ownership is a Great American Dream! enjoy the process. :patriot: do people (making $75k from the example) really have $35K in yearly credit/non-house/non-mortgage payments? (that wasn't total debt - that was yearly payments) that's just inconceivable to me - even *with* student loan debt. Quote Link to comment Share on other sites More sharing options...
QueenCat Posted July 4, 2015 Share Posted July 4, 2015 do people (making $75k from the example) really have $35K in yearly credit/non-house/non-mortgage payments? (that wasn't total debt - that was yearly payments) that's just inconceivable to me - even *with* student loan debt. That's pretty inconceivable to me too. Quote Link to comment Share on other sites More sharing options...
Guest Posted July 4, 2015 Share Posted July 4, 2015 I may be reading this wrong, but I thought the OP asked how much home is affordable on a 75K salary, not how much house could be bought in any specific area. Aren't we dealing with just numbers here, not location? Yes, that was how I read it, too. 75k as a sum wouldn't buy anything, but as a salary with a responsible owner who saved for a bit you could get something small or older in this HCOL area. Plenty of condos are available in the 200-250k range here. Quote Link to comment Share on other sites More sharing options...
regentrude Posted July 4, 2015 Share Posted July 4, 2015 do people (making $75k from the example) really have $35K in yearly credit/non-house/non-mortgage payments? (that wasn't total debt - that was yearly payments) that's just inconceivable to me - even *with* student loan debt. I did not read this as "typical" value - just as a random example for the calculation. It seems way too high to reflect any average debts. I disagree with the article: 4 times the annual income seems way too much; it will leave the person strapped for cash. The rule of thumb I heard of no more than 2.5 times the annual income seems more sensible. Quote Link to comment Share on other sites More sharing options...
SeaConquest Posted July 4, 2015 Share Posted July 4, 2015 2.5x75k income is 187k in house. That would buy you nothing in San Diego County, even with another 100k in savings to add to the mortgage. 2 Quote Link to comment Share on other sites More sharing options...
regentrude Posted July 4, 2015 Share Posted July 4, 2015 2.5x75k income is 187k in house. That would buy you nothing in San Diego County, even with another 100k in savings to add to the mortgage. Yes, exactly - I doubt there is a house in San Diego one could comfortably afford with a 75k salary. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 I did not read this as "typical" value - just as a random example for the calculation. It seems way too high to reflect any average debts. I disagree with the article: 4 times the annual income seems way too much; it will leave the person strapped for cash. The rule of thumb I heard of no more than 2.5 times the annual income seems more sensible. my dd bought a lower-end, but good, family house 18 months ago - it was >4X what she was then making on an above average salary for this area. house prices have only gone up since then. this market is hot and already she could sell at a profit. if she hadn't been willing to spend that much - she'd have had no other choice but a condo, or a dinky fixer. and she wanted land. (+ houses have better resale value here.) historically, salaries have continued to grow and mortgage payments are locked in so every year they are a smaller percentage of ones income. she's not strapped for cash - but is responsible with her money. Quote Link to comment Share on other sites More sharing options...
kroe1 Posted July 4, 2015 Share Posted July 4, 2015 Not even a trailer here on the island. A 3000 sq. ft. house where we moved from in Arkansas. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 4, 2015 Share Posted July 4, 2015 2.5x75k income is 187k in house. That would buy you nothing in San Diego County, even with another 100k in savings to add to the mortgage. you might find a studio or 1bd condo in an older building for that in my town. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted July 4, 2015 Share Posted July 4, 2015 Maybe they read it as, $75k for the house? Not, $75k for a mortgage? That said, California is insane. My partner just got offered relocation there. We decided it would be more financially responsible to cut our income in two, have only me work, and stay up here and move 1 hr east or south. Yeah I'd say California is pretty extreme in terms of house prices. I know 75K in California would probably not cut it for buying a house. Quote Link to comment Share on other sites More sharing options...
TechWife Posted July 4, 2015 Share Posted July 4, 2015 Assuming a mortgage of 2x annual salary, In my area it would get a 2 BR 2.5 Bath, 1300 sq. ft. townhome. Quote Link to comment Share on other sites More sharing options...
frogger Posted July 4, 2015 Share Posted July 4, 2015 The question was how much could a person making $70 K afford. I think that depends on all the variables listed by others plus number of mouths to feed (which may have been mentioned) and utilities. Last winter we were paying $200 for electric and $300 plus for gas. That is not even including waste disposal, phone/internet, water and sewer. I think you will see dramatically different answers that could be absolutely correct. 1 Quote Link to comment Share on other sites More sharing options...
frogger Posted July 4, 2015 Share Posted July 4, 2015 I wonder why banks don't ask for the number of children you are actually supporting not just child support payments. 2 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 4, 2015 Share Posted July 4, 2015 my dd bought a lower-end, but good, family house 18 months ago - it was >4X what she was then making on an above average salary for this area. house prices have only gone up since then. this market is hot and already she could sell at a profit. if she hadn't been willing to spend that much - she'd have had no other choice but a condo, or a dinky fixer. and she wanted land. (+ houses have better resale value here.) historically, salaries have continued to grow and mortgage payments are locked in so every year they are a smaller percentage of ones income. she's not strapped for cash - but is responsible with her money. I assume though that she doesn't have kids yet. Taking on a mortgage 4x your income when you are single or without children is a bit different than taking on one that size when you have little feet to keep in shoes, little bellies to fill and looming orthodontia work. We are in the same general area and I expect that we wouldn't be comfortable with more than 3x our annual income when we are ready to buy our next home. 4 Quote Link to comment Share on other sites More sharing options...
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