If you are wondering, "How much money can
I borrow for my house purchase?" No money or need money or wondering what other monies you need . . .
The answer is; it all depends.
Depending on your target monthly payment or annual income and a few other factors that might not be on your radar, this affordability calculator will tell you the price of the home you can afford and the amount of money you can borrow.
Depending on your target monthly payment or annual income and a few other factors that might not be on your radar, this affordability calculator will tell you the price of the home you can afford and the amount of money you can borrow.
Your affordability is calculated based on the
percentage of your income spent on monthly debt. Most lenders limit how much of
your monthly income can pay debt such as mortgage payments, car loans, and
student debt (this is called Debt-to-Income ratio). The conventional limit is
36% of your monthly income, but this could be higher for FHA loans. Your
remaining income after debt and taxes should be enough to cover living expenses
and savings goals. It is also wise to have cash set aside to pay for any large
unexpected repairs or financial emergencies.
If you are considering an FHA loan for 2014 in
the S.Palm Beach Area beware that there are a changing. Coming
into 2014 changes will affect how much house you can purchase with an FHA loan .
. . Come January they are reducing this max loan amount to
$625,500 and they are reducing the max limits in most areas across the board.
PALM BEACH COUNRTY in
2013 Current Limits:
Single Family $423,750
Duplex $542,450
Tri-Plex $655,700
Quad-Plex $814,900
2014 Standard/High-Cost FHA Loan Limits
The ceiling (i.e. maximum loan limit) varies
by county and if you’re shopping for an FHA loan, it’s crucial to make sure
your desired home fits within these designated guidelines. Designated high-cost
areas apply to approximately 70 metropolitan areas, including Los Angeles,
California; New York City, New York; as well as the District of
Columbia/Washington D.C. Below are the minimum to maximum loan limits in 2014:
Single Family Home $271,050 to $625,500
Duplex $437,000 to $800,775
Tri-Plex $419,435 up to $967,950
Quad-Plex $521,250 up to $1202,925
Annual income
This is the combined annual income for you and
your co-borrower. Include all income before taxes, including base salary,
commissions, bonuses, overtime, tips, rental income, investment income,
alimony, child support, etc.
Down payment
This is the amount of money you will put
towards a down payment on the house. Make sure you still have cash left over
after the down payment to cover unexpected repairs or financial emergencies.
Monthly debt
Include all of you and your co-borrower's
monthly debts, including: minimum monthly required credit card payments, car
payments, student loans, alimony/child support payments, any house payments
(rent or mortgage) other than the new mortgage you are seeking, rental property
maintenance, and other personal loans with periodic payments.
Do NOT include: credit card balances you pay
off in full each month, existing house payments (rent or mortgage) that will
become obsolete as a result of the new mortgage you are seeking, or the new
mortgage you are seeking.
Interest rate
This is the interest rate for the loan you
will receive over the term.
Debt-to-income (DTI)
Your DTI is expressed as a percentage and is
your total "minimum" monthly debt divided by your gross monthly
income. The conventional limit for DTI is 36% of your monthly income, but this
could be as high as 41% for FHA loans. A DTI of 20% or below is considered
excellent.
Income taxes
This is an annual tax that governments place
on individuals' income. It includes federal tax. The national average is around
30% but can vary based on income, location, etc.
Property taxes
The mortgage payment calculator includes
estimated property taxes. The value represents an annual tax on homeowners'
property and the tax amount is based on the home's value.
Homeowners insurance
Commonly known as hazard insurance, most
lenders require insurance to provide damage protection for your home and
personal property from a variety of events, including fire, lightning,
burglary, vandalism, storms, explosions, and more. All homeowner's insurance
policies contain personal liability coverage, which protects against lawsuits
involving injuries that occur on and off your property.
Mortgage insurance (PMI)
Mortgage insurance is required primarily for
borrowers with a down payment of less than 20% of the home's purchase price. It
protects lenders against some or most of the losses that can occur when a
borrower defaults on a mortgage loan. Also known as PMI (Private Mortgage
Insurance).
HOA dues
Typically, owners of condos or townhomes are
required to pay homeowners association dues (known as HOA fees), to cover
common amenities or services within the property such as garbage collection,
landscaping, snow removal, pool maintenance, and hazard insurance.
Loan term
This is the length of time you choose to pay
off your loan (e.g., 30 years, 20 years, 15 years, etc.)
All of these elements
are important to consider when speaking with your Real Estate Agent/Realtor and
Lender. I encourage you to generate a list and to really explore any questions
honestly with your House Hunt Team!
And for your entertainment "Mo Money doesn't mean Mo Problems": http://www.youtube.com/watch?v=gUhRKVIjJtw
As always I am glad to talk real estate at:
