I am a first time buyer and have about 3% for down payment. Can you tell me if there is a formula for what I?

Asked by Ricardo, Phoenix, AZ Thu Jun 5, 2008

I am a first time buyer and have about 3% for down payment. Can you tell me if there is a formula for what I need to make salary wise for a certain priced home. Similar to renters who must make 3 times the monthly rent. Is there such a formula so I know what I can afford?

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Lori Bonnell, Agent, Phoenix, AZ
Thu Mar 26, 2009
Ricardo, the City of Phoenix is in the process of rolling out the Neighborhood Stabilization Program which will provide a $15,000 interest free loan (to be paid back when you sell the house) for people looking to purchase bank owned properties. There are income caps and other requirements. If you would like more information about this program, email me at lori.bonnell@cox.net.
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Marina Kocian, , Scottsdale, AZ
Mon Jul 14, 2008
You should be talking with a Lender and a Realtor, Find the location you like to buy a house. See if you could qualify for some programs, (down payment assitance), FHA sounds that is right for you. The lender industry is changing, what is now being offered, might change. I strongly encourage you to talk to a lender and ask lots of questions, get informed and always read before you sign.
Web Reference:  http://ownyourhomeaz.com
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George Purpu…, , Gilbert, AZ
Mon Jun 9, 2008
A lender is the first step in the process, However I have on my website two excellent tools to help you understand before you go to the lender. Go to my website and look at First Time Home Buyer and then to Buyer Information and click on the Estimate your buying Power. If you need help just let me know and I'll get you there.
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Brent Bester, , Columbus, OH
Thu Jun 5, 2008

It sounds like you are looking to calculate you DTI (Debt to income ratio). In order to do this to see what you will qualify for on a purchase price you also need a mortgage calcuulator, the annual taxes, homeowners insurance preium, and you also need to calculate your MIP preimum which is .50 for FHA and loan amount to be accurate.

Next step is you need to figure out what your GROSS monthly income is prior to taxes. Next you need to add up all the current monthly debts on your credit bearu. Do NOT add in the debts if you have less than 10 payments left on to be paid off as underwriters will not count this against you. Take your total monthly payments on your debts and add that up. Then divide by your gross monthly income. That is your front end ratio.

Then add all your monthly debt payments (Only the ones on your credit report!), add in your monthly mortgage payment with those Debts. Finally divide that total by your gross monthly income = Your back end ratio. For FHA you want your back end ratio to be around 43% or less.

It might be easier to contact a local banker or loan officer and have them figure it out for you. Let me know if I can help you out further!! But that is the formula my friend.......

Brent Bester
Mortgage Professional
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Todd Lee, Agent, Phoenix, AZ
Thu Jun 5, 2008
Most of the answers below are accurate but for the best advice, speak to a lender that specializes in FHA loans. That sounds like it will be your best option. There are several FHA programs and I am sure that an experienced loan officer can help you find the best fit. I have a couple that I work with that have been doing loans for over 30 years. I would be happy to give you their information if you would like. Just let me know and I would be happy to help!
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Johnye Nardin, Agent, Gilbert, AZ
Thu Jun 5, 2008
Hello there! I read the previous answers that you have gotten and concur with all of those. I have a private lender, however, that may be able to help you, depending on the price of the home. You could go to my website and I have a few Bank Owner Homes that are very reasonably priced. I also have some others which will be coming on the market soon. Good luck in your home search.
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Lucinda Tkach, , Phoenix, AZ
Thu Jun 5, 2008
A lender will give you the most accurate account of what you need for down payment and what you can afford. I have a lender on my website that you may want to ask these specific questions. He has access to down payment assistance if you need it. You may qualify for an FHA loan which will may give you a better rate.

Feel free to contact me if you have any questions or concerns!
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Sal J. Giorl…, , Phoenix, AZ
Thu Jun 5, 2008

You can use the mortgage calculator on my website to see what you can afford. Feel free to click the link below.

Let me know if you have any questions.

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Laura Canny, , 85381
Thu Jun 5, 2008
Yes, there is a formula to figure out how much you can afford. You need to look at your income vs. your expenses--your debt-to-income ratio. You don't want your expenses to be more than 50-55% of your income. Keep in mind that you will need more than 3% for a down payment to buy a home. You will need a minimum of 5% down payment, for a loan-to-value ratio of 95%. You will also need to have 3% to pay for closing costs, plus you will have to have 2 months reserves in the bank. For example, if you make $2,500/mo., your total expenses can't be more than $1,300. In the Phoenix market, FHA loans are on the rise. To qualify for an FHA loan, you will also need to have a minimum credit score of 620 (600 for conventional loans). However, with all of the seller competition & first-time buyer down payment assistance programs & loan programs out there, there is a good chance you could get assistance with some of the costs. I hope this information is helpful.
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George Messe…, Agent, Naples, FL
Thu Jun 5, 2008
Yes you have program FHA 3% down payment
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