Julie23, Home Buyer in 07074

I make 100K a year, have a credit score of 780 and no other loans and can put down 80K down. RE taxes are approx. 7K - How much house can I afford?

Asked by Julie23, 07074 Tue May 17, 2011

What is the price range of the house I can afford and would I need a cosigner?

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..., , Lexington, MA
Tue May 17, 2011
Hi Julie

Gerard brought up a good point - knowing the real estate taxes implies that you have a specific property or price range in a specific geographic area in mind. Asking that you might need a cosigner tells me that you feel that there is some weakness in your qualifications to obtain mortgage financing or that you plan to purchase a home in excess of what your salary might support. The general answers given here are fine, but you may do well to simply obtain a no-cost, no-obligation pre-approval from a few lenders to not only give yourself a better understanding of the process but to also allow the lenders to look at a more complete picture and provide you with a a fairer and more accurate answer.

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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Tue May 17, 2011
Affording vs. qualifying are two different things. You'd need to personally evaluate your finances, net income, utilities, etc. to determine if you can afford a certain payment.

As far as qualifying, what Jamie said is correct, 45% debt ratio is a common threshold that most lenders have today with conventional financing. FHA financing can approve debt ratios into the 50's, but you could really be stretching your income then.

With the info you laid out, you'd easily be able to qualify for a $500k sales price, and potentially even a $600k sales price. But property taxes usually scale with the property value, so I am not sure what price you were basing the $7k/year property taxes on. I was using a 2% tax rate, meaning a $500k home would have $10k/annual property taxes, as I know they can be pretty high in NJ (even higher than 2% I've found in some areas).

If you had a co-signer that could possibly change things with FHA financing, but with conventional financing and the loan amounts/down payments you would be dealing with (and could no longer qualify for on your own), it wouldn't help (since the occupant borrower has to qualify debt-ratio-wise anyway).
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Gerard Carney, Agent, Spring Hill, FL
Tue May 17, 2011
Why ask how much you can afford, why not ask how much house can I get at a good deal. If you can get a home with payments that are 30% or less, then you have made an equation where you can own and still have built in room to save money so that each year you become more financially strong. Put it at this You can afford to buy a $200k home, put down %50k and bank the remaining $30K as reserve for unforeseen problems and as breathing room in times of financial downfall. You can live comfortable, I do not know how you already know how much RE taxes are since that would mean you already have a home in mind, but the numbers quoted would leave you financially strong!
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Jamie Collins, Agent, Fair Oaks, CA
Tue May 17, 2011

Basic answer is: 45% Debt to income ratio. Take all your monthly credit debts and the the full house payment divide it by your income. Some lenders will still allow up to 56.9 % but, most are 45-50%

It will still depend on a few things though.. I would go ahead and get a referral to a good Loan Officer. They will be able to tell you exactly what you can qualify for.

Good Luck,

Jamie Collins
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