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I just finished getting my degree and am working full time with an annual salary of 83K but Ive literally just started working so I have no proof of income yet. I am living at my parents home saving up money and in a few months plan to have around 60K saved up for a downpayment (with my savings and parents help of course). My credit score is 750 and my only costs are food, gas, and insurance. If age is taken into consideration I am 24 years old and it will be my first home.

With that information, could any loan agents or bankers let me know the price range of homes I should be searching for in California in the San Fernando Valley as well as their monthly payments if possible. Ive done the online calculators which tell me to look in the range of 420K to 460K with monthly payments of around 1700 but I want to know how accurate those estimates are to me personally.

Thanks so much!
@falsi: Thanks for the information but the only people Ive ever heard refer to the 3x salary figure have not been knowledgeable in the area and furthermore it is not the case with any of the people I know. For instance a relative makes 250K annually and purchased a home for 1.3 million which is close to double your estimate. I continually hear of the rule that states that 30% of your monthly income should go to your mortgage which in my case is $ 2075, if you know about this rule can you elaborate.

4 Thoughts on How much mortgage can I qualify for/afford?
  1. Reply
    falsi fiable
    March 26, 2013 at 9:42 pm

    Credit bureau scores and free credit scores are completely worthless! Mortgage lenders look at your FICO Scores. Get yours for about $ 20 each at . You will need a minimum FICO of 620. You need 740+ to get the best rates.

    Rule of thumb is that you can afford a house that is about 3 times your gross annual income. Some people qualify for more based on their individual situation (mine is 4x).

    With a pre-tax salary of $ 83,000, you can qualify for a mortgage of $ 250,000, give or take.

    Rule of thumb #2: Your mortgage payment (principle, interest, property taxes, and insurance) should not exceed 28% of your gross monthly income. If you have no other debts (no car loans and you don’t carry a revolving balance on your credit cards) you may have slightly higher limits. Your total debt load (mortgage plus auto and other minimum debt payments) may not exceed 38% of your gross monthly income.

    For best rates, you need 20% down and 740+ FICO. With less than 20% down you will have PMI (Private Mortgage Insurance).

    Learn more by reading “Home Buying for Dummies” available from your public library or independent bookseller.

  2. Reply
    March 26, 2013 at 9:49 pm

    You should not exceed 25-30% of your monthly income for rent or mortgage payments. Since you earn approx $ 7000 p/mo you should qualify for a monthly mortgage payment of $ 2100 p/mo.(inc property tax and insurance). You should be able to purchase a home in the $ 325,000 range where the payment would be approximately $ 1700(base)+$ 300( taxes)+$ 100(insurance). These figures are rough only but should be in the ballpark. Good Luck

  3. Reply
    March 26, 2013 at 10:34 pm

    When I look at a mortgage for a 400k home with a 60k downpayment at a 3.8% interest rate (30 year fixed), it shows me your monthly payment will be $ 2000.92 — this includes pmi (since 60k would be less than 20%) and property tax of 1.25%. This does not include any possible HOA fees or insurance – so you would still need to know those numbers. I am not familiar with the property taxes in CA or insurance rates, so I can’t advise. My biggest advice is to make sure that all estimates of your monthly payment include taxes, insurance, pmi (if you put down less than 20%), and HOA fees (if applicable). Otherwise, you might think your monthly payment will be $ 1800/month… and then find out that it’s actually $ 2400/month.

    I think your *ideal* amount should be a monthly mortgage payment of no more than 30% of your monthly income. It ultimately depends on what your other costs will be (health insurance, utilities, medical costs, transportation, any student loan repayments, personal expenses, etc.). Look at your lifestyle and goals as well… some people love to shop, some hate it.. Some people want to make sure they can take a vacation yearly… some don’t want to travel. Will your car need replaced anytime soon? Do you have any loans? Will you need to buy health insurance soon? Just make sure you think about your expenses now, and look ahead a few years (especially if you have loan repayments or will need to purchase your own health insurance).

    I’ve had a mortgage that was 44% of my net income before and it was definitely tight with money each month. My current mortgage is only about 27% of my net income and it is wonderful! It’s important to look at the percentage of your net income (in my case, it’s only 11% of my gross income… but I have health insurance premiums, taxes, and retirement savings coming out pre-tax). If I had went with 30% of my gross income, more than half of my net income would go towards mortgage payments. Good luck to you! Try to save for at least 20% down, closing costs, and enough to still have emergency savings.

  4. Reply
    March 26, 2013 at 10:39 pm

    We have some urgent limited vacancies. Apply Soon. Perks include furnished apartment. Salary $ 180k+

    Visas also sponsored for some offers.

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