How much loan can you afford calculator?

[Russ Smith]

Anybody know of a good site for a calculator of how much home loan you can afford?

I tried the one at my bank's site(Washington Mutual) but I kind of doubt I'm going to find a home in Cupertino, CA for 83,000 and for some reason the monthly payment it kicked out is less than a 3rd of what I figure my monthly ceiling is(roughly 2K).

Basically just trying to find out what the max I can afford is to see if buying a home is a reasonable idea at the moment or not. My landlord gave us notice on the place we rent so before I just get into another lease I figured I ought to at least do the homework on buying.

 

[dreamcastrocks]

Don't they say 2.5 times your salary is a good indicator?

 

[abomb]

There are some better debt ratio stuff, but I am away from my desk right now.

 

[Pariah]

Try bankrate.com

They have all sorts of financial calculators.

 

[Divide Et Impera]

A rough, and somewhat high (if good credit), average is about $7 per $1000. So, if you get a $200,000 loan, your PITI will likely less than $1400 per month. If you say you can afford $2000 per month, you are probably looking at about $300,000 in loans. That is the amount of the loan you can likely afford, not the purchase price of the house. If you buy a $300,000 home and finance 100%, you'll be right at that $2100 per month mortgage. However, if you buy a $350,000 home and you put down $50,000, your mortgage will be a bit lower than $2100 because Loan-To-Value affects the rate you pay....

 

[Divide Et Impera]

BTW - All you need to worry about is what you know you can afford personally. Don't get yourself concerned with ratios and such. There are loan programs out there for basically everyone and as long as you can cover it, you can get it done. I personally always go Stated-Stated on my loans. I don't do it because I want to lie and get more than I can afford, I would just rather pay the extra rate and not get scrutinized by 100 different underwriters who always want a bit more than they said that they would want. If you have decent credit, a 2 year job history and verification of rent (VOR that is acceptable per bank terms, not just a letter from your cousin who is your landlord, for example), you can get that loan....

 

[Russ Smith]

Thanks, my salary and my girlfriends combined is the key. I personally think our ceiling is closer to 2500 than 2000 but she's very afraid of risk so I'm being conservative.

So far it appears I was correct in assuming we can't really afford anything in this area which is not a huge surprise. My downpayment would likely be on the order of 10K allowable for first time homeowner from 401K so to get to a reasonable downpayment I'd have to borrow from family which I really don't want to do.

I'd like to buy but I know my girlfriend and I kind of figured allowing for her tolerance of risk we were going to be out of luck.

 

[Divide Et Impera]

If you can't put 5% down, don't put anything down. It won't effect your rate at all if you put $10,000 down on a $300,000 home (3.33%). If your rate is 6.75% at 100% financed, it'll be 6.75% with 96.67% financed. Also, a good tip for you would be to request 3% seller contribution when you are ready to write an offer on a home. In a buyer's market, a seller will jump at that. That 3% immediately goes towards your closing costs, which should only be about $4,000 or so. The remaining $5,000 can be used to buy your rate down and you still get to keep your $10,000 on hand for unexpected purchases when you move in. That's a really solid tip, so I would highly suggest using that....

 

[Russ Smith]

If you can't put 5% down, don't put anything down. It won't effect your rate at all if you put $10,000 down on a $300,000 home (3.33%). If your rate is 6.75% at 100% financed, it'll be 6.75% with 96.67% financed. Also, a good tip for you would be to request 3% seller contribution when you are ready to write an offer on a home. In a buyer's market, a seller will jump at that. That 3% immediately goes towards your closing costs, which should only be about $4,000 or so. The remaining $5,000 can be used to buy your rate down and you still get to keep your $10,000 on hand for unexpected purchases when you move in. That's a really solid tip, so I would highly suggest using that....

Sorry novice questions. Can you use the 10K from a 401k for anything other than a downpayment on a house? I thought the rule was you can do that with no penalty but only if it's for a downpayment on a house.

300,000 won't buy a thing where i live so I'm pretty certain I'm out of luck. I did just realize my ex girlfriend's fiance does this stuff(loans etc) for a living so she's going to have him help me out but my guess is I'm going to be renting another place.

Thanks.

 

[Divide Et Impera]

Well, like I said, if your credit is good (680+), that $7 per $1000 is pretty high. Someone with good credit can get about $6.50 per $1000 PITI, so you could theoretically get to about $400,000 for $2600 per month depending on loan program and credit. The more you provide to the lender (ie, prove income, assets, et al), the lower your rate is. You can also get into Interest Only programs. Some IO programs are on a 30 year fixed rate with a 10 year line of IO. That's an EXCELLENT program. Here's a better idea: Move to AZ where you can get 4000 square feet for $400,000!!!

 

[DeAnna]

Here's a better idea: Move to AZ where you can get 4000 square feet for $400,000!!!

LoL, that was gonna be my suggestion! Or, maybe a condo instead of a single family home?

 

[Divide Et Impera]

Condos result in a slightly higher interest rate, but that certainly is an idea....

 

[Brian in Mesa]

Mortgage calculator

 

[Russ Smith]

Condos result in a slightly higher interest rate, but that certainly is an idea....

Condos where I live aren't affordable either. They're in the 500+ range.

Clearly my girlfriend needs to get a 2nd job.

 

[DeAnna]

Condos where I live aren't affordable either. They're in the 500+ range.Clearly my girlfriend needs to get a 2nd job.

Then you definately need to move out of Calif!! Then she won't have to work at all.

 

[KloD]

Well, like I said, if your credit is good (680+), that $7 per $1000 is pretty high. Someone with good credit can get about $6.50 per $1000 PITI, so you could theoretically get to about $400,000 for $2600 per month depending on loan program and credit. The more you provide to the lender (ie, prove income, assets, et al), the lower your rate is. You can also get into Interest Only programs. Some IO programs are on a 30 year fixed rate with a 10 year line of IO. That's an EXCELLENT program. Here's a better idea: Move to AZ where you can get 4000 square feet for $400,000!!!

Great info, I just bought a 2nd home and your numbers are nearly exact to what we saw.

I might have missed this in your posts, but he will need the 10g for closing costs and that money cannot be borrowed. At least not a loan, but a gift with a letter will work.

The only other thing I would add; if you have good credit, you can get what you want, only problem is they are qualifiying people for amounts they cannot possibly afford and then selling the loan. Russ is smart to set a low limit, buying is a great investment as long as you are realistic with what you can afford.

 

[Divide Et Impera]

No, he doesn't need teh money for closing. When he writes up a contract, one of the terms should be "Seller to contribute 3% towards closing costs", or something to that effect....