How much can i actually afford to spend on a house?

Asked by Davide Cerri, Boca Ciega Isle, Saint Pete Beach, FL Sat Jan 19, 2008

I have $300k put away to use as a downpayment and i am starting a job that will pay me 90k a year. My wife now makes about 20k a year. We would like to get a SFH preferably in San Francisco, but we do not know what we can actually afford. is it 600k above our means?
Also, right now i am renting for 900$ a month a 1 br apartment, should i just stay here and put away money while hopefully prices will decrease?

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Sally Rosenm…, Agent, San Francisco, CA
Mon Jan 21, 2008
Dear Davide,

All of the answers below are good. I would suggest you check out the mortgage calculators mentioned or try mine on my website noted below. Then your best bet is to talk to an excellent mortgage broker who will help you work the numbers to fit your lifestyle and comfort zone. Try Tim Wood of Mortgage Guaranty at 415-462-2777 or I am happy to email you a list of brokers and/or lenders to call. Prices are not expected to decrease now. Naturally, it depends on what really happens in 2008 to our economy and what the Fed does with Interest rates. If you keep waiting, however, opportunities can pass you by -- especially if the market does appreciate and Interest rates rise. Good luck on your search!
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0 votes
Sun Jan 20, 2008
Hi Davide,
There is a formula to go by, but it really depends on your spending habits, other expenses, family size, etc. Plan on the property costing you around 50k a year. Costing might not be the right word, you will have tax benefits and build equity.
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Liz Stevens, , Berkeley, CA
Sun Jan 20, 2008
You are quite well qualified, I believe for a $600,000 home in SF, however, I highly recommend you call Zephyr Realty in SF and ask for an experienced agent who will guide you and not push you. She will help you know what you qualify for and what your monthly payment all inclusive will be - she can then show you what the homes in your price range look like. I have no connection to Zephyr, I just know they are good. Best of everything.
0 votes
Greg Corvi, Agent, San Ramon, CA
Sun Jan 20, 2008
Today Conforming Loan Rates(a loan 417k or less) are about 1% less then Non Conforming Loan Rates(a loan more then 417k). Based on your incomes and todays' loan rates, you should be comfortable with a loan amount under 417k. So be sure to talk to a mortgage broker about the different rates for conforming and non-conforming loans. Regarding whether to wait or not, no one can "time" the market. It depends on your personal situation and motivation to purchase. If you intend on being in this home for more than 3-5 years, I would encourage you to start looking. You have clearly taken the first step with your Savings amount, good luck with your decision.
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Melanie Nard…, , San Francisco, CA
Sun Jan 20, 2008
Here's an online calculator that you can use to plug in a few scenarios
About 600,000 should be a doable amount to take on, depending on your other debts such as car payments or credit cards. Also remember to take into consideration property taxes, home insurance and home maintenance. And there will be tax advantages to home ownership for you as well.
If your lease is coming up and you're looking to buy, you may want to negotiate a month to month renewal, or a shorter than yearly lease to allow you time to 1) meet with a mortgage professional to help you answer your question in detail and to write you a pre-approval letter; and 2) interview a few Realtors to find a professional that will help you identify a property you want. You can also begin searching for properties at to begin to see the properties on the market. Happy hunting!
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Michelle Car…, Agent, Coppertino, AL
Sun Jan 20, 2008
What a great start you are on. Lenders today really want to see buyers put at least 20% down, so your downpayment is actually at 50% of that, so you are ahead of things. Lenders, like all creditors, take into consideration your FICO or credit scores (today, they really want over 700). As far as budgeting, the formula they use is ~25% of your income to go toward ren/tmortgage, with no more than ~32% of income going to your total debts each month.

We expect 2008 to be a great year for investors and buyers as there are lots of good opportunities for people with the cash, credit and courage to act.

I always counsel my clients to pray about it and then follow their gut instincts.
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