# how much mortgage can I afford on \$85,000 a year?

Asked by John, Fairfax, VA Mon Jan 28, 2008

## Help the community by answering this question:

9
John,

To help answer your question, lenders use whatâ€™s called a debt-to-income ratio to determine how much home you can afford. FHA usually requires your monthly mortgage payment to be no more than 29 percent of your monthly gross income, before taxes. This is the â€œincomeâ€ part of the equation. This monthly mortgage payment includes principle and interest, property taxes, homeownerâ€™s insurance, and applicable condo fees.

If you gross \$7,083 per month, then \$7,083 x .29% = \$2,054.07 per month. So a lender would say you can afford a combined mortgage payment of no more than \$2,054 monthly. With a 5.50% interest rate, this would roughly equate to a \$295,000 - \$300,000 mortgage (including taxes and insurance).

However, most people do have reoccurring monthly debt such as credit card payments, car payments, student loans, child support, etc., and lenders factor this into your qualifying ratio as well. FHA says your monthly debt obligations should not exceed 41% of your income, so \$7,083 x .41 = \$2,904.03 - you cannot have more than \$2,900 in monthly reoccurring debt.

Now here is where it can get pretty upsetting. If you have as little as \$1,000 in monthly reoccurring debt, this would lower your loan amount from \$300,000 to just under \$200,000. WOW! In addition, you have to consider your credit score which should be above 720. So obviously, the less monthly debt you have, and the higher the score, the more home you can buy!

To work out the numbers yourself, visit this website as it offers multiple mortgage calculators to help you estimate what you qualify for. This is a great resource for prospective buyers to use, before they speak to a lender.
http://mortgages.interest.com

I hope this information was â€œthumbs-upâ€ helpful, and please write again if you have any other questions.

Frank Biganski, Realtor ABR
Hello,

The best place to start is with a local Mortgage Specialist to evaluate the best options for you and you're new home. You're in luck! I pride myself of treating all clients as people and listing to what their questions are.

Call me at any time at 703.568.3749 Cell or Email rross@gmmllc.com to set up a meeting!

ROB ROSS and GEORGE MASON MGT Information

The Ross Group was started by Rob Ross who has served as a Senior Loan Officer with George Mason Mortgage for the last 6.5 years. During this time he also formed elite partnerships with several real estate and marketing groups. Rob & his team also originate loans throughout the entire Washington Metro area with realtor relationships with many of the top companies. Mr. Ross is a member of George Mason Mortgageâ€™s 2003, 2004, 2005, 2006, & 2007 Presidentâ€™s club and has closed over 255 Million in residential home loans over the past 5.5 years. Rob is also a member of â€œWhoâ€™s Whoâ€ among business professionals. Rob has a B.S. in Finance and a Minor in Communication from the West Virginia University.

The Ross Groupâ€™s forte is creating a smooth loan process from start to finish while providing abundant and helpful information every step of the way. It is Mr. Rossâ€™ goal to be sure every client feels confident and more educated when each transaction is complete! The Ross Group will make sure your home purchase is one you want to remember.

Want great service and competitive rates? Work with the #1 local lender you can trust!
Web Reference: http://applywithrobross.com
John,

Getting pre qualified by a mortgage broker is a step in the right direction......but we suggest taking it one step further and look at your personal budget closly and coming to an understanding of what the real number is for you.

My email is sean.thorson@wachovia.com

Sean
John - That depends on a number of factors, many of which involve your personal finances, credit score, back-end ratios, etc. Your question is best answered by a mortgage professional, which I am not (I'm a Real Estate Consultant/Realtor).

I can offer you a few names of experienced and honest loan officers that can give you a list of programs and options that fit your specific criteria. At the top of the list is Darran Anthony with SunTrust mortgage who has been in the business for years and is very experienced and knowledgeable.

If you would like his direct line and/or email along with others I have experience working with, just let me know.
Web Reference: http://www.LoudounStats.com
There are a variety of different loan programs and each will look at your income differently. How much you are planning on putting down, whether you are going to get a fixed rate loan or a variable rate loan and so much more play into the correct answer to the question. You should speak to a mortgage professional, they will do it with no obligation but will give you the BEST answer for your circumstances. If you would like a recommendation of one to call please let me know.
Please use Mortgage calculator at http://www.ilikevirginia.com to get some idea (no sign up free resource) or let me know if I can provide you few good loan officers names from my past clients to do the work for you:)
How much you can afford also depends on your credit score. Generally, the better your score, the lower your interest rate and the more you can qualify for. Do check with a LOCAL lender of good repute.
John
You may want to call a reputable local lender to have them prequalify you. It will cost you nothing to do so.
Best of luck