[quote author="knm131" date=1218600729]So, if anyone can correct my math ... I'd appreciate it.
If I were to buy a $349,000 home, and put down $50,000 down (the one I'm looking at has $75/mo HOA and it's in Lake Forest). 3 bdrm/2 ba SFR and about 1,300 sq ft.
That means I'd have to borrow $299,000 and I'll assume a rate of 6.75% over 30 years fixed. Using a calculator I found on BankRate, I'm looking at a monthly mortgage payment of $1940. Plus $75 for HOA makes it $2015 per month.
Add 1% for property tax is $3,490 annually is $291 per month for a grand total of $2,306 per month not including maintenance.
That's still a ton of money, with someone whose annual is $110k I'd say their take home is around $4,700 per month. That's a pretty high DTI no?
I guess I could factor in the mortgage interest deduction, but I'd like to make my mortgage payment in spite of it, and not because of it.</blockquote>
DTI is usually calculated by using gross income, not net. Therefore, your "take home" amount is not the relevant amount for DTI purposes. Whether that reflects true affordability is a separate question.
If you gross $110,000 and you are only netting $56,400 ($4,700 x 12), something is seriously wrong. Your combined federal and state tax burden should not exceed 35% of your unadjusted gross income. By my rough and dirty calculations, your net should be at least $5,800 monthly, unless of course you are discounting for retirement and insurance deductions.