BUYER'S RESOURCES
What monthly payment can you afford?
Qualified monthly payment is 1/3 of your gross income (option 1).
Suggested monthly payment is 1/4 of your net take home pay (option 2).
The reality is, the greater Los Angeles area has a median income of $55,000/year. Median home price is $600,000. It is easier to choose option 1, but only you know what your other obligations are.
What can you afford?
Purchase Price: $500,000
Downpayment: $100,000
Loan: $400,000
Monthly Payment: $2,517
*Don't have 20% down? You can buy this house for as less as $17,500 via FHA program, mortgage payment at $3,296. Ask me how!
**Based on 4% APR, 30 year mortgage, taxes and insurance(s) included.
Source: mortgage101.com
Affordability scenario:
Gross Household Income, annual: $100,000
Gross Household Income, monthly: $8,333
Option 1 monthly payment: $2,777
Option 2 monthly payment*: $1,667
*Option 2 monthly payment is based on a $100,000 gross income less 20% or $20,000 in taxes = $80,000 divided by 12 months=$6,667. Divided by 4 = $1,667
The magic number is between the two numbers. Find out where your affordability is based on the rest of your monthly obligations.