E, Other/Just Looking in West Los Angeles, Los...

My husband and I have a large down payment ($500,000) but modest yearly incomes (about $70,000 together).

Asked by E, West Los Angeles, Los Angeles, CA Sun Mar 8, 2009

How can we figure out how much house we can afford?

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Dorene Slavitz’s answer
When you meet with your buyer agent for the first time it is advisable to include a loan officer , he/she will assist you by looking at all your expenses and income and pre-approving you for an amount you can afford.
1 vote Thank Flag Link Tue May 19, 2009
The "normal" ratio of payments to income should not exceed 45%. But, under what is called a Freddie Mac loan, there may be ways to get you qualified for a higher debt ratio.

The best way to find out is to have the Freddie Mac computer give the answer.

I can do that for free for you. You can do the application at http://www.theloanapp.com or call me at 877-282-5789
Web Reference: http://usloans.com
1 vote Thank Flag Link Sun Mar 8, 2009
It is highly recommended to speak with a licensed mortgage broker and thereafter have a conversation with your accountant. It is important to speak with your accountant as you may be able to write off property taxes and interest on your loan and should have preliminary conversation about pros and cons relating to your financial house.
0 votes Thank Flag Link Sun Feb 8, 2015
The best way is to call and/or meet with a trusted loan consultant that was referred to you by your realtor so you can figure out the details.
0 votes Thank Flag Link Thu Feb 2, 2012
A loan officer should be able to tell you what you qualify for. Although, I'd recommend being rather conservative. Maybe even pay cash for a $500,000 house. I don't know what property taxes are in LA, but you may have a pretty good payment on property taxes alone.
0 votes Thank Flag Link Thu Feb 2, 2012
Hi E,

Have you been looking at homes in your preferred areas to get a feel of the price ranges?

The best option is to speak with a loan officer. Following a free consultation, he/she will pre-qualify you and if you provide him/her with further info you can even get pre-approved.
The loan officer will explain to you whether you'll have to pay mortgage insurance or not, how much your monthly mortgage would be, the amount that will go in taxes etc....

I will be happy to provide you with contact info of a couple mortgage brokers. Just shoot me an email with your contact info.

C: 323 274 6995
Web Reference: http://MimiDaviesHomes.com
0 votes Thank Flag Link Thu Feb 2, 2012
It really depends on how much do you feel you can actually pay every month and where you want to live. I have had clients that can afford a $4 million home, but they are insistent in trying to by a $5 million home... the exact same way I have clients that can afford a $250K home, but they want to only consider $270K properties... there is something within our society that encourages living beyond our means... be careful not to get caught up in that trap... remember lenders, and brokers make commission and the higher the house we sell you, the more money we make... but you have to live with it... with that significant amounf of down-payment I have client right now that we are looking for a duplex in West LA that needs modest repairs, so she can get a good deal... her mortrgage is only going to be around $100K (less than $1,200 a month and she will have rental income...

I would say with your income you would qualify for about $2,600 a month payment, but do you really want to pay that much money every month?
0 votes Thank Flag Link Wed Sep 8, 2010
There are different factors to take into consideration but based off of some assumptions I would say with a down payment of $500k approximately a sale price of $650k with a 15 yr. fix or a sale price of $750k with a 30 yr. fix.

Any further questions regarding financing then feel free to contact me and good luck to you.
0 votes Thank Flag Link Mon Mar 9, 2009
A lender will calculate your debt to income ratio and then, based on your downpayment, the loan amount will be determined which will add up to the house you can afford.This debt to income ratio is a "front end" ratio. There is also a "back end" ratio but lets leave it out for this discussion. The front end ratio is also known as the housing expense ratio. This is the ratio of your total expenses on your house to your gross income. Different lenders use different numbers, however, it generally ranges from 33 to 38%. Let.s use the higher ratio, as an example, in your case. With the yearly income at $70,000, the monthly gross is $5,833. 38% of this is $2,217. This is what your Principal, Mortgage Interest, Property Tax and Property Insurance must add upto.

To find out what you can actually afford, you will have to get qualified by a lender. The higher down payment is a plus but the controlling factor will be the debt to income ratio and your FICO scores.

Bob Khalsa
Broker Owner
United America Realty
0 votes Thank Flag Link Sun Mar 8, 2009

There are many factors that come into play in answering your question. What is your credit score? How long have you been at your job? How much are you putting down? What are your other debts? Etc, etc, etc.

Start by getting pre-approved by a lender. They will look at all your factors and tell you how much loan you can afford. Then add that to how much down payment you want to make and you have your home price. Next find a realtor who you feel very comfortable with and who is going to negotiate the best deal for you and identify your new home. This way you are making decisions based on full information, and you know without me telling you, those are the best and most comfortable types of decisions. Happy house hunting and Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
0 votes Thank Flag Link Sun Mar 8, 2009
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