How much house can I afford in Georgia on my salary?
April 27, 2007 · Print This Article
M.B asked:
My husband and I make $53k a year together (total in home income). No car payments, no other major expenses, other than childcare for our 3 year old daughter (who will be in pre-k next year). How much house can we afford in Georgia? We currently already reside here…even born here. Just don’t know what our price range would be. Please only those who either live in Georgia, lived in Georgia, or truely understand Georgia’s income-debt ratio against salary/income ratio.
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My husband and I make $53k a year together (total in home income). No car payments, no other major expenses, other than childcare for our 3 year old daughter (who will be in pre-k next year). How much house can we afford in Georgia? We currently already reside here…even born here. Just don’t know what our price range would be. Please only those who either live in Georgia, lived in Georgia, or truely understand Georgia’s income-debt ratio against salary/income ratio.
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Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
There is no debt to income ratio for each state, it is pretty much no matter where you go. It doesn’t matter if you live in Alaska, Maine, Texas, or where ever. It is the same across the board.
An easy way to determine how much of a mortgage you can afford is to double your annual BEFORE taxes income. With having no debt you could go slightly higher, up to probably about $125k. DO NOT sink your whole income into a house. You have to take things into consideration like keeping in mind you need to add a car payment to your debts in a year or two. Keep your house payment (principal, taxes, insurance, and interest) to no more than 30% of your before tax monthely income. So based on $53k, your monthly payment should be no more than about $1324 per month.
Where you live doesn’t have much to do with qualifying for a mortgage.
What you make does. The FHA ratios are 31/43. Your ratios can be higher if you get an automated approval.
Using the standard ratio for housing of 31%, you could afford total payments of about $1,350/month. If I back out, $250 for taxe, insurance and MIP and assume a rate of 6.25%, you could afford to buy a home up to about $183,000.
Since you don’t have a lot of other debt, you could probably go a little higher. If you have liquid assets and good credit, you could probably go a little higher.
Ask you lender about special programs for first time home buyers. Your state housing finance agency probably has some of the best options for you.
Good luck and I hope you found this information helpful.
I agree with the first answer. Second answer…. still looking for the Country of Georgia
I think no more than 150K with a mortgage of 1000… but if you make a few extra payments per year, it will be good for you in the long run.
You are actually asking 2 questions. What you can qualify for (the amount that the bank will give you) and what you can actually afford.
Yes, banks will give you up to 32% of your gross income to be used for a mortgage. In fact VA will go up to 40%. This means that under a VA loan, you could actually have a monthly payment of $1,766 a month.
I highly suggest that you don’t spend more then 25% MAX of your gross monthly income for your total payment.
For example:
53,000 (/) 12 months = 4,420 a month
4,420 (x) .25% = 1,104 for your total payment
1,104 (-) 270 (for taxes, PMI, insurance) = 834 for the loan
at 6% 30 year fixed rate you could get a 140,000 to 150,000 mortgage.
Add your down payment to this. If doing FHA, you need 3% or 4,500. This means you should be looking at homes priced in the 155,000 MAX range (or less!!!).
You will also need closing costs of around 3,500 (unless you can get the seller to pay). Total cash needed is 4,500 to 8,000.
You don’t want to be house poor. You NEED to be saving at least 10% of your gross income. This means that you should be saving around 500 a month. EVERY MONTH.
DON’T BE HOUSE POOR.