Home Buying in San Jose>Question Details

Jennifer, Renter in San Jose, CA

First time buyer, can I afford it?

Asked by Jennifer, San Jose, CA Wed Apr 24, 2013

I am currently making $55,000 a year. I would like to purchase a small condo (10% down) Do I even have a chance? What about an FHA loan?

Help the community by answering this question:


There is an excellent chance you could buy a small condo depending on what other debts you have. A key factor in your decision should be how stable is your job and your desire to stay in the same area?

With low interest rates not only is your payment lower but you build up equity quicker. A $500,000 mortgage at 3% interest will have a monthly payment of about $2,108 and will build up $55,468 of equity in 5 years. A similar mortgage at 6% would have a payment of about $2,998 and would only build up $34,728 of equity. Keep in mind you will also have HOA fees, taxes and insurance. See my general real estate mortgage information at:

The equity you build up would likely cover the costs of moving if for some reason you needed to after four or five years. Any appreciation would be extra money in your pocket. If you plan on moving in one or two years, buying may not be a good choice.

San Jose real estate statistics show an average price for a condo in San Jose of about $500,000 and a minimum condo price of about $170,000.

Getting qualified for a mortgage should be your first step and will be a very important step. You need to understand the different mortgages available and the risks and costs each has. After you understand the mortgages you will be able to judge where and what a typical condo would be like that you could afford. If you would be satisfied with the typical condo and you expect to keep it for at least five years, it could be a very worthwhile decision.

You could consider finding a rent paying room mate which could make it even more attractive. Your borrowing power to purchase the condo would probably not be improved by telling the lender that you intended to have a rent paying room mate because lenders like to see a history of receiving rent.

Talk to several lenders and think carefully about your expected future. My daughter has just made a similar choice (which I think is fantastic).

Juliana Lee
Top 2 agent nationwide at Keller Williams
Cell: 650-857-1000

Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo Counties
Web Reference: http://julianalee.com
1 vote Thank Flag Link Wed Apr 24, 2013
Hello Jennifer. You are probably the perfect buyer for the 1st Time Buyer programs available from the Santa Clara County Housing Trust. Their Mortgage Assistance Program (MAP) allows you to get a regular 80% loan from any Lender, then they will provide a 17% 2nd mortgage at just 1% higher rate.
This means you only need 3% down payment.
A MAJOR BENEFIT of this is that you will not have to pay PMI (Private Mortgage Insurance) which is required by FHA and greatly increases you payment.
Drop me an e-mail or call if you would like more information on this.
1 vote Thank Flag Link Wed Apr 24, 2013
What area are you looking in? Have you looked at prices? A good rule of thumb is lenders will allow you to go up to about 45% of your income in total debt (you can push it it to 50% with FHA). Do you have a car payment? Student loans? Credit cards? If so what are the payments. This all will help us determine what you are qualified for. Feel free to contact me if you would like me to assist.
1 vote Thank Flag Link Wed Apr 24, 2013
You've asked two very different questions.
I suggest you speak with a financial planner to discuss how much you SHOULD be spending on your home purchase before you ask how much you COULD qualify to borrow. If you're like most people, there is more going on in your financial life than just a place to live. A financial planner is the best place to start.
1 vote Thank Flag Link Wed Apr 24, 2013
I suggest going down to your local bank and get pre-qualified. From there, they will let you know what you can afford. You'll be able to see the payments on the mortgage and other costs associated with owning a condo.
0 votes Thank Flag Link Sun Apr 28, 2013
All excellent answers below. There is not enough information for us to give you an solid answer. How much money do you have to equal 10%. Do you have additional funds for closing cost and lender required reserves? Is the money a "gift" and is it seasoned?

Your debt, credit, income history, etc. all play a part in the qualification. As stated, the market is tough on all buyers right now, so it is in your best interest to meet in person with a lender and get an understanding of what you can afford and if that fits your goal and lifestyle.
Web Reference: http://www.TerriVellios.com
0 votes Thank Flag Link Wed Apr 24, 2013
Suggest you give me a call or lets talk on line..
there is more to it than your brief notes..

John Hanson.. Community West Mortgage
0 votes Thank Flag Link Wed Apr 24, 2013

There are several choices here, and FHA is just one of them available.

There are conventional loans that do not require mortgage insurance (the lender can pay it for you in return for a higher rate), and there are combination lenders where we do an 80% equity usage for your first mortgage and a 10% equity usage for your second mortgage. 10% down would then be enough.

This option would allow you the best interest rate and not have mortgage insurance.

With your income level, it is important that you get a loan that fits easily in your monthly budget and not be risky.

Glad to see you are doing your research here.


Eric Olfred Nelson, III
Sr. Mortgage Planner
SVC Funding - Campbell
NMLS # 120412
DRE # 01258488
0 votes Thank Flag Link Wed Apr 24, 2013
I would like to introduce to an extraordinary lender that I have successfully helped buyers similar to your situation. She can give you great advice, after learning what is important to you and knowing a bit more specific situation. Carolyn Mountain, Wells Fargo. Her contact information:

Carolyn Mountain

Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 633276

Wells Fargo Home Mortgage | 225 W Santa Clara St | San Jose, CA 95113
MAC A0571-110
Tel (408) 282-4727 | Toll-free 855-709-6727 | Cell 408-806-7005 | Fax 866-794-3309
0 votes Thank Flag Link Wed Apr 24, 2013
Hello Jennifer,

I encourage you to meet with a lender in your area and go through the application process. This is the only way you will know what's possible.

Bear in mind that all California markets are very tight right now, have low inventory, and are very competitive. The FHA loan is a great program but difficult to get accepted right now in a real estate bid.

Good luck to you.
0 votes Thank Flag Link Wed Apr 24, 2013

Yes, of course you have a chance to buy a condo! Start out by learning as much as possible.

Check with a financial planner and a lender to learn more about what you qualify for, and what it will cost (i.e., FHA has additional fees). Then, find a realtor you are comfortable working with. And be as flexible as possible in what you are looking for. Your purchase options may be limited by your financing options. For example, some condo and town house communities are not FHA approved; if you have conventional financing, some lenders restrict purchases based on owner-occupied rates. There are other parameters you should learn about from your lender and / or your realtor.

Good luck and have fun in the process.

Sally Blaze
0 votes Thank Flag Link Wed Apr 24, 2013
Dear Jennifer, there are many other things that come into place when buying a home. Your best bet is to interview several Realtors® along with several lenders and pick one that is a good fit for you. The lender will be able to go through your questions and more in greater detail and tell you what your next move should be along with the different types of loans and what you will qualify for.

It sounds like you have a shot at it, but you will need to talk with a lender before going forward. If you find an agent first, then ask him/her to recommend several lenders to you.

Best wishes on your endeavor.
0 votes Thank Flag Link Wed Apr 24, 2013
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