How expensive of a house can I afford?
December 16, 2008 · Print This Article
helen_faye_2006 asked:
I make 11 dollars an hour and I work a forty hour work week. I want to buy a small house but I dont know how much I can afford. Maybe something that costs 80,000- 100,000 dollars.
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I make 11 dollars an hour and I work a forty hour work week. I want to buy a small house but I dont know how much I can afford. Maybe something that costs 80,000- 100,000 dollars.
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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.
Banks will usually restrict you to a house that is between 2 and 3 times your annual salary. In your case that comes to about 22,000 a year so you may be able to afford a house in the 44,000 to 66,000 range. You will also need a 5 - 10 % downpayment, preferabley 20%. The 20% will mean you would not be required to get mortgage insurance.
A maximum monthly payment of 30% of your income
usually three times your salary. so you make about 22k a year you should be able to afford about a $70, 000 house.
If you’re serious about house hunting, meet with some banks and mortgage lenders who can review your finances in detail and give you a solid idea of what you can do or what changes you need to make to get where you want to be.
If you’re just curious right now, there are many calculators for this online. I like the ones at but keep in mind that many calculators don’t add in estimates for homeowners insurance and property tax so your actual mortgage payment will likely be more than the calculator states.
Rule of thumb….irregardless of what any banker, loan rep or real estate agent says!
You can afford any house that cost less then one years gross income.
Make 85,000 a year? look for homes 85,000 or less…this will ensure you can afford the finer things in life also …like curtains,..and maybe pizza and a movie….
So many young people are bent on buying into the whole idea of having to spend several hundred thousand to keep up with the jones’ ..but the jones’ always have curtains….forget the jones’ and make sure you live within your means.
My initial answer is don’t get into a house that costs you more than $572 per month. This is based on $11 per hour multiplied by 2080 equals annual gross income before taxes and deductions of $22,880.00 per year. Multiply $22,880 per year by .30 and you arrive at $6,864 in annual house payments. If you divide $6,864 by 12 you arrive at $572.00 per month for a monthly house payment.
However don’t forget escrow for taxes and insurance. Don’t forget that your net income is much lower than $22,880. (Its probably closer to $15,730.00). Your actual house payment could be closer to $850.00 after taxes and insurance. With a monthly net income of about $1,311.00, you will have precious little left over for electric, phone, gasoline, food, car payments. Take $1,311 and subtract the house payment of $850 and you have $460.00 in net income each month for everything else. Take $50 out to save for the future. How is your credit? Can you get a great deal on a house?
The rule I used is to pay no more than 30 percent of your annual gross income on house payments. You will get mortgage interest deducted on your tax return as a benefit of home ownership. Good luck.
I need more information to answer your question. Do you have any other debts? If not, then I would stick to the $80k range. If you have other debts, even less. Also, I would need to know your credit score and if you have a down payment.