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Interest rates have been good all year and lately have become very good! We have been well below 6.0% for the past week! With all the talk about this economic crisis and difficulty in borrowing money, let's look at the facts. First, there are no "stated income" loans available in the traditional lending arena. You have to prove that you have a job! And if you don't, why would you be buying a house anyway? That said, I've put together these two tables to give you an idea of what it takes to buy a home. Because down payment money is usually one of the biggest obstacles for the home buyer, I've used the FHA mortgage as an example which allows for only a 3% down payment. Each table uses three different housing prices and three different interest rates.
Now here's my legal disclaimer (The FHA loan amount is higher than 97% due to the inclusion of mortgage insurance. Rates are not to be construed as the APR and are used only as examples. Interest rates change on a daily basis. Risk based adjustments to interest rates may apply due to credit scores and credit history. Not all applicants will qualify. Additional closing costs may apply.)
Ok, now that the legal stuff is out of the way, one more thing. It is not uncommon today for sellers to pay for buyers closing costs. If that's the case, then all that is needed is the down payment indicated to buy a home! So let's take a look.
This table simply uses the basic monthly housing payment as your only debt for qualification.
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FHA Purchase Example
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House Price
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Down Payment
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Base Loan Amount
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Loan Amount w/Mortgage Insurance
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Interest Rate
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Monthly Payment
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Payment w/taxes, insurance & Mortgage Insurance
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Monthly Income Required to Qualify
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Hourly Wage Required to Qualify
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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6.25%
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$607.70
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$785.49
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$1,963.72
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$11.33
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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5.75%
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$575.97
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$753.76
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$1,884.41
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$10.87
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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5.25%
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$545.01
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$722.80
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$1,807.01
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$10.43
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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6.25%
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$911.55
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$1,178.23
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$2,945.58
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$16.99
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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5.75%
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$863.96
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$1,130.65
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$2,826.61
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$16.31
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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5.25%
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$817.52
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$1,084.20
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$2,710.51
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$15.64
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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6.25%
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$1,215.39
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$1,570.98
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$3,927.45
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$22.66
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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5.75%
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$1,151.94
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$1,507.53
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$3,768.82
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$21.74
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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5.25%
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$1,090.02
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$1,445.61
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$3,614.01
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$20.85
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However, because most of us are not debt free, here is an example if you have $300.00 in monthly consumer debt.
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FHA Purchase Example w/$300.00 in monthly debt
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House Price
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Down Payment
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Base Loan Amount
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Loan Amount w/Mortgage Insurance
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Interest Rate
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Monthly Payment
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Pmt w/taxes, insurance & Mortgage Insurance
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Monthly Income Required to Qualify
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Hourly Wage Required to Qualify
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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6.25%
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$607.70
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$785.49
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$2,713.72
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$15.66
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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5.75%
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$575.97
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$753.76
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$2,634.41
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$15.20
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$100,000
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$3,000.00
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$97,000.00
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$98,697.50
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5.25%
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$545.01
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$722.80
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$2,557.01
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$14.75
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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6.25%
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$911.55
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$1,178.23
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$3,695.58
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$21.32
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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5.75%
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$863.96
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$1,130.65
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$3,576.61
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$20.63
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$150,000
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$4,500.00
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$145,500.00
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$148,046.25
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5.25%
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$817.52
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$1,084.20
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$3,460.51
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$19.96
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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6.25%
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$1,215.39
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$1,570.98
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$4,677.45
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$26.99
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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5.75%
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$1,151.94
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$1,507.53
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$4,518.82
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$26.07
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$200,000
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$6,000.00
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$194,000.00
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$197,395.00
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5.25%
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$1,090.02
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$1,445.61
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$4,364.01
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$25.18
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So, what's the point here? Housing prices and interest rates have come together to provide the greatest buying opportunity in decades! Even with some monthly debt, the "regular guy" working for a living at, let's say $14.00/hr, can buy a home today! Or if two people are each earning $9.00/hr that's $18.00/hr so just look at the table to see where they fall.
If you or anyone you know has questions or needs more information on specific situations, feel free to call me anytime. We can put the numbers together and see how much home you can buy!
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Ken Rivera - Turlock
Turlock,
CA
More about me…
American Pacific Mortgage
Office Phone: (209) 668-7000
Cell Phone: (209) 648-3596
Email Me
A mortgage sales manger and loan officer offering timely opinions and advice on local, state, and national mortgage topics serving Turlock, Stanislaus and Merced counties and the ability to lend in the entire state of California if required by my clients.
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