What is Your Price Range?

NEW -> Contingent Buyer Assistance Program
IrvineRenter_IHB

IrvineRenter_IHB

New member
Many of the posters on the blog and in the forums have come here looking for advice on a purchase they are looking to make. Sometimes, they will say my price range is $X to $Y. More often than not, this is the amount some lender is willing to loan them.





So I ask you this: "If you knew you had to pay back the mortgage <em>from your income through payments</em>, what is your price range as a percentage of your yearly income?" In other words, if you had to pay off your mortgage, how much would you borrow?





Mine would be 3 to 3.5 times income (plus a down payment of 1/2 year income), perhaps less if mortgage rates continue to rise.
 
1/3 of my monthly income after taxes going to mortgage payment. If I could do that with 20% down and 15 year amortization that would be splendid. I most likely will be buying with a substantial down payment or all cash.
 
I'd be willing to pay up to 50% of my monthly income (after taxes) for a 15-year loan over 30-year one on a "home". Spend a little less now and pay off the house faster. But if that's not feasible, 30-year loan with extra annual payment is acceptable too.
 
<p>IR,</p>

<p>So you would be willing to pay PMI? 1/2 year down on 3-3.5 price is only 15-18%. </p>

<p>For me, 20-25% down and 25% monthly gross income would be ideal, but up to 30% income is okay. That's for a 30-yr fixed.</p>
 
<p>Question. Why is it when qualifying for a mortgage, they do so on "gross" salary and not on "net" yearly. </p>

<p>I would put down 20%, willing to pay up to 3X to 4X income (it would have to be sweet though). I won't be buying for about 3-4 years to make this equation work.</p>
 
gepetoh,





I don't mind PMI, but if I can put 20% down, I will certainly avoid it. I will go higher than 15% to 18% DTI, probably closer to 25%. I save a lot, so going much higher would require me to save less, and I doubt I would do that (Savings is a peace of mind payment.)
 
<p>Up to 50% of my income, but i will eventually put down 20-30% or more if the case requires it. It just depends, i'm shooting for a house so 200k in cash is difficult to come by. I might just bite the bullet and to a 10-15yr loan and get it over with. </p>

<p>Good luck</p>

<p>-bix</p>
 
I have an additional question, one that I always am up in the air on, how much of your savings would you commit to buying a house when you are ready? For instance I always say somewhere b/w 70% to 80%
 
<p>Good question. I don't have a clue. Much depends on what a dollar, an ounce of gold, and a share of the Dow will buy in a few years.</p>
 
Instead of telling you what we would be willing to pay, I'll tell you what we are paying since we just closed last week. Mortgage is 2.6 times our annual income. 30 year fixed. When we were fishing for a mortgage, they would qualify us for a mortgage amount that was way beyond my comfort zone. Don't listen to them on what they claim you can afford. A mortgage of 4x your income would be pretty stifling I would imagine.
 
<p>Irvine_Native,</p>

<p>Congratulation, Did you buy in Woodbridge where you grew up? What value ratio was your purchase price and the age of the home?</p>

<p>I think it would be a great idea to start a list tracking our members' recent purchases just like the template that Zovall started.</p>

<p>This will provide a good reference point and price gauge for others thinking of buying. hopefully including IR.</p>
 
IrvineNative....Congrats on the new purchase, think you told us about this the other week.





Since you just purchased do you mind telling us how much of your savings you used as a down payment.





My definition of savings is anything other than your 401K, IRAs, Bonds...etc that you can liquidate fairly easy, less than 3 days.
 
The home we purchased recently, PITI plus HOA, will come out to about 38% DTI, not including tax breaks with a 50% down and a 30 year fixed. We don't have any car payments or debt, so the total DTI is also 38%. A bit aggressive, but within reason, I suppose...





-OCR
 
I would also currently buy at about 3-3.5x income, at least 20% down, 30 years fixed. Or 5x income with neg-am loan (jk!). However, I would like to bring up that this may change if my income changes. If I made 70K then I would only be comfortable with up to 2.5x as food, gas, and utility prices come into play. Alternatively if I made 500K then buying a 2mil home may be reasonable as the cost of food, gas, and utilities may be relatively minimal.
 
I am extremely conservative -- I bought my house with 30% down and a 30 year fixed. About 15% of my monthly income goes to mortgage, HOA and home insurance.
 
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