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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.


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.

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