Question Details

T Fentz, Home Buyer in 46235

if i make $30,000. a year. How much should i buy a house for?

Asked by T Fentz, 46235 Thu Oct 9, 2008

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4
Rule of thumb is 3 x your gross yearly income.
So for you 3 x $30,000 = $90,000

Good Luck
2 votes Thank Flag Link Thu Oct 9, 2008
The purchase price is one factor. Down payment is another. You can buy a $500,000 house, put down $450,000, and get a mortgage for $50,000 that might be affordable on $30,000 a year. Your repayment burden is driven by the loan, not necessarily by the purchase price. If you're assuming the purchase price is roughly equal to the loan amount, then you're assuming little or no down payment, and you're in the realm of government loans... If you go through the loan qualification process for a government loan, you'll find out exactly how much you can afford. You'll generally be limited to what the feds think is affordable, in terms of both your housing expenses and your overall expenses, in relation to your income. There's no reason to guess, or waste your time house hunting without knowing if you're mortgage-ready and, if so, under what conditions. Talk to a competent, conscientious mortgage specialist at a government-approved lender, and explore your options.
1 vote Thank Flag Link Sat Oct 11, 2008
Suze Orman and others suggest no more than 1/3 your income.

Plus have 6-9 months in liquid savings to cover your housing expenses if you have to take time off work
0 votes Thank Flag Link Sat Oct 11, 2008
I second Dawn's response.

Add up ALL expenses you have during the month, use the past year's statements to look through your history and see if your expenses have gradually gone up monthly as well too, so you can plan on them to keep raising. After everything is added up, how much do you have leftover? Figure out how much of that needs to go into savings, and how much you can use towards a monthly mortgage payment. This should give you a pretty good idea.

I also agree that if you have two incomes, plan using just one. In today's market, it's highly probable that one job could be lost and you want to be prepared!
0 votes Thank Flag Link Fri Oct 10, 2008
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