Joe, I am not sure where the others are basing their answers on but if you want to know what the maximum price your could "qualify for" would be, its determined by debt ratios. Right now you can qualify (assume good credit) for up to 57% debt ratio for FHA loans.

This means: 5000 a month income x .57% = $2850mo

$2850mo - any debt you have monthly (credit card payments, car loans ect)

If you have no debt that leaves a max payment of 2580 a month (for mortgage taxes, HOA, insurance, ect)

At todays rates of about 5% that equates to a price of up to $525,000 actually.

But thats not taking into account insurance, taxes. HOA dues, ect...so you would need to lower the total price enough to keep the total below $2850mo For every 10k you finance it increases the payment about $55...so if taxes/insurance are an additional $300mo - you need to lower the max price by about 50k.

So, with that said, you can probably qualify in total for a max price of up to about $475,000. Plus any more money you put down in excess of the minimum 3.5% needed. So, 500k would likely be a top/max point for you roughly.

The current max allowable debt ratio of 57% is changing in 2009 however and will limit you to 45% or $2250mo - which would keep you in the 350k range.

You can quality for more than is fiscally prudent, as the government is backing everything and broke the risk equation.

Financing anything more than 4x your income is a really questionable. With your down I'd recommend in the range of $270K to $280K at the *absolute* max - varying slightly based on closing costs and government bribe... errr... tax credit eligibility.

I am so happy to see the post below this one! I read the notes earlier and was saddened to see the variety of opinions and the great gap between the amounts they say you can qualify for. You do need a good, valid estimate of what you can afford before you start shopping. Awesome job on saving money. If you look at my website home page, you will see three lenders that I use a lot. They are ethical, professional, and will give you an honest and realistic view of what you can afford. Also, if you want to make an offer on anything, you usually do need to include a pre-approval letter, which any of these three will provide free of charge.

If you aren't working with an agent, please give me a call. I would be happy to help you walk through the maze of homebuying and give you the best advice I can. It can be a daunting task for the first-time home buyer (which happens to be my favorite type of buyer). My name is Bonnie and my phone is 714.296.0513. My email is Bonnie@BonnieTheRealtor.com. Also feel free to check out my testimonials and credentals there. I'm with a top agency and am an award-winning agent. I CAN HELP!

Joe-as you can see, there are many lenders hungry for your business. My advice to you is to sit down with several mortgage brokers and your bank or credit union and get a Good Faith Estimate from each. They can show you what will cost you the most/least up front, and what will be the best loan program for you.

It is important to shop as fees can vary greatly. The programs remain the same from one company to the next for the most part.

Congratulations on making good financial decisions and working hard to be where you are. Keep doing your research and go sit down with some reputable lenders.

No matter your loan program, the home buying process requires basically the same steps. You can learn a little more by going to:

http://portal.hud.gov/portal/page/portal/HUD/topics/buying_a_home

I wish you ALL the best and continued prosperity!

I can probably do a loan for you between $300,000-$325,000.
It still may be tough to find something but it is more doable.
I would have to take a loan application and run your credit for sure.

Hi :) I am a realtor as well as I am a loan officer. I have worked in this industry doing loans for over 7 years and I have been a realtor for over 4 years. I just went through and did a quick pre-qualify for you and I show that puttong 20% down you can afford a home that is about $200,000 (40,0000)down and have a $260,000 loan amount. Rates right now are roughly about a 4.875% (30 year fixed) which would make your pymt $846.00 + taxes/insurance (taxes:average on that purchase price in OC is $200/month/and Insur. average $60/mth) for a total payment of about $1,000. You can get a nice 2 bed or 3 bed condo for that price. Now if you want to put a lower down pymt of 3.5%minimum, you can actually qualify up to $350,000 with $12,250 down and you would finance the rest with a loan amount of $337,750 at an average rate of 5.25%(or less) which would give you a payment of $1,865+tax/ins. which would make your pymt $2,328. I can work out different scenarios for you too. I also have access to properties that are exclusive and not yet listed on the MLS (so you will have 1st choice before anyone else). Please feel free to contact me if you have any further questions regarding financing or purchasing a home. Thank you, I look forward to talking with you :)

180K sounds about right for your income of 60K. You'll probably qualify for a lot more, but then you won't have enough money for the fun things in life, like a vacation. You'll be a slave to your house payment. So stick with the 180K. Wait a few years, the prices will drop to a level where you can reasonably afford a house. Good Luck

Thanks for everyone's advice. I was starting to feel discouraged after using some online calculators. I guess I just need to sit down with a lender and really find out what I qualify for.

The investment idea of buying a du-plex or tri-plex sounds like a great idea. Although I should elaborate that although I'm single, I will be getting married soon, and for that reason I'm leaning toward a single family home.

Thanks again.

Hi Joe,
This is my suggestion: There are 3 unit properties out there right now that go at about $530K. 2 bedroom 1 bath units renting for $1,200 a month each. If you live in one and rent the other two your out of pocket each month will be about $1,350. This figure is based on 3.5% odwn which is FHA for up to 4 units. If you occupy one of the units. If you buy a single family home you can go about $340K or so. the payment would be about $2350 a month. That is $1,000 more than with the tri-plex. Because properties tend to go up the same you should make more money in equity with the higher priced property.
Connie Bramble
Prudential CA Realty
714-337-8718

Hi Joe,

If you are 24, unmarried with no kids then you are in a great position to create your future wealth. What I mean by this is that at this time of your life you have more flexibility when buying a home. So food for thought: You may want to consider buying a multi-unit property, 2-4 units, as for your "first" primary residence.

My reason for recommending this? When buying a 2-4 unit property as your primary residence you can come in with as little as 3.5% down. Where as if you were to be an investor seeking to buy units...You are looking to have to put down anywhere from 20-25% as your down payment. Long term thinking here is the key in building your wealth portfolio while taking advantage of the low down, your age, and being unmarried at this time.

A few more thoughts to add here. The lender will take into consideration the rents you would receive which in turn will increase your buying power (the lender will take approximately 70% of the rental income and apply it to yours);. You get to depreciate the units you rent from your taxes; You get to write off the interest from your loan from your taxes; You could also charge an additional fee for garage usage on a monthly basis for additional income; And if you were to have a laundry room you can also make money from the machines your tenants would be paying to use for doing their laundry.

What do you think?

Enjoy your day and always here to add value!

Joe, if your Credit Score is good I think you are a strong buyer and can buy a house around the $300,00
I will be happy to send you a list of forclosures and short sale properties I had work these areas for the last 16 years, I am sure I can help you, give me a call.

Joe, congrats on saving up such a big down payment. From the numbers you give me it seems that you may qualify for a little more than $180,000 but it also depends on what payment you feel comfortable with. The first thing you should do is talk to an experienced lender. I use a loan officer that has been doing loans for over 20 years and she is great. She can give you an answer right away. I would be happy to share her information.

Once you find out how much you qualify for and a payment you are comfortable with, then it is time to start looking for homes. I work primarily with first time buyers and would love if I could help you. Give me a call or email and I can put you in touch with a great lender and start sending you homes so you can get a better idea of what is out there for you.

Theresa Struckmeyer
714-244-8761
theresa@orangecountyshortsalehelp.com

Hi Joe: I am very familiar with the areas you want to purchase in and you are looking at a sales price of $300-$350K. With your downpayment, there may be some loan programs out there that will allow you to qualify for possibly more than the calculator on the Internet.,though I do know your credit score will be very important in determining what the lenders will lend.

I will be glad to refer a lender to you that I know will be able to give you the answers you need. His name is Steve Soriano with Essex Mortgage. (562) 429-3532 Ext. 56. My recent buyers, Claudia and John used him and his family has used him for years. He gets the job done and he is very reasonable with his fees and has great interest rate offerings.

If I can be of any other assistance, since I know the areas you want to purchase in so well, feel free to contact me at 714-296-7270 or email me at bstrealtor@aol.com.

Regards,
Barbara Robbins-Olexa, Broker, e-Pro Internet Certified, SRES(R)
L B Brokerage
DRE Lic#797560
714-296-7270
bstrealtor@aol.com http://www.barbararobbinsolexa.com

Don't be discouraged. I would suggest that you view my website at BonnieTheRealtor.com and look near the end of the home page. There are three lenders there who are awesome!!! They are professional and ethical. If anyone can help you, they can. Sometimes certain professions qualify for down payment assistance and special lending programs. I would suggest you contact a reputable lender. I also work with first-time homebuyers in this area, and would love to help you. Feel free to call if I can be of assistance. Of course, getting your financing in place is the first step. There are still great options for you in this price range. Good luck! Hope to talk with you. Bonnie Scribner, 714.296.0513

Hi Joe: Congratulations on deciding to purchase a property.
Owning a home changes your life and lifestyle.
You are on the right tract, finding out how much you can afford.

I highly recommend you talk to a lender so be absolutely sure what you can qualify for, there are so many loan progarms out there..

Can i refer you a lender to talk to over the phone or by email?
Mike Patel

Joe,

The best thing to do is to actually speak with a direct lender and provide them with the details of your situation. They can tell you exactly what you can afford. There are some nice condo's and even older homes in the areas you are interested in. If you need a referral, let me know. $180,000 + $40,000 = $220,000 home or condo.

Joe Homs
Realty Partners
949-625-4533
joe@joehoms.com