What type of house can I afford? I make $52,000 wife graduates in December and will make around $40,000.?

I want to take advantage of Obama's first time home buyers rebate program and purchase a house by December 1st. I just graduated from college and make $52,000 a year and that will likely have a salary raise in the upcoming years. I will marry my fiancee by the time she graduates in January, and she has a job waiting for her that pays $40,000 a year. I currently have $40,000 for a down payment and she will be getting a $40,000 graduation gift that we can put down towards our house as well, but not until January.

I was wondering if it was possible from me to purchase a condo in Chicago's loop/gold coast/ river north, etc area and what can we realistically afford.

Update:

Both of us received 100% scholarships, so we have zero debt. No car payments, credit cards, etc.

Our credit score is up in the air, we each rented apartments in college and where never late on utilities.

8 Answers

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  • 1 decade ago

    With that amount of income, and down payment, you should be able to afford to make a mortgage payment in the area of $3,000 a month. However that will be dependent upon your credit score (FICO) and your combined other debt. Also there will be other considerations take into account. All being acceptable you will be able to get a good low interest loan. As a guideline each $100,000 you borrow will cost you about $600 a month. Buy a $200,000 house less $40,000 down payment (20%) leaves a mortgage of $160,000 or around $1,000 a month. However, if you purchase a more expensive house and do not make a 20% down payment you will have added costs for mortgage insurance in addition to whatever morgage amount you have. The mortgage insurance may be discountinued when you arrive at a 20% equity position...proven by a current appraisal at the time.

    I don't know about Chicago condos, talk to a real estate agent for pricing and comparisons and talk to a local mortgage company, or your bank loan officer, about your qualifications for a loan and what amount they will lend you. Don't use Money Tree. Many banks make loans without upfront or escrow fees, including appraisals, so check that out.

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  • 4 years ago

    My bank has a great calculator for estimating the PI payment along with taxes and insurance combined. But when you are looking to buy it is a good idea to take a good look into both your liabilities (such as the car payment and insurance) and also into your current spending habits. A good book to take a look at (I borrowed a copy from the local Library) is Home buying for Dummies there is an entire chapter devoted to determining how much home you can truly afford. Versus the amount you may be approved for there are many things the bank does not take into consideration. Here are a few of them for an Idea (but I reccomend reading some basic home buying books because im sure I will forget something) Basic Home expenses: 1) Principle and Interest payment 2) PMI if you do not have a 20% downpayment (unless you qualify for a VA loan.) 3) Home insurance 4) Liability Insurance 5) Home Maintence and Repairs 6) HOA dues 7) Utilities -water sewer waste cable phone electric 8) Property Taxes to include any other special assements Other Monthly Liabilities to consider: 1) Food 2) Transportation costs - maintenance, Fuel, state registration fees, Tolls or parking fees (if applicable) 3) Debt Repayment - Auto Loan, Student Loans, credit card debt or anything else that requires a monthly payment 4) Health care - Insurance, dental and vision, 5) Insurance - auto, life, disability 6) Clothing, shoes, haircuts, dry cleaning, makeup, other 7) Child care, toys, clothing, school... 8) Retirement savings After looking through your monthly expenses determine what amount is left over monthly. That should give you an idea of the amount you can really afford for a home. The monthly amount you can afford should take all the basic home ownership expenses into account. My husband and I have been looking into buying a home and while the bank could approve us for nearly 200k we found we were more comfortable with closer to 100k once we reviewed our spending habits and monthly obligations. Just remember the bank is never telling you what you can AFFORD when they approve or qualify someone they are only letting you know the maximum amount that they will let you borrow. Also take into consideration closing costs when buying some mortgage brokers will offer a loan with little or no closing costs but they may end up costing an arm and a leg later on in the form of higher interest rates and fees.

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  • MadMan
    Lv 7
    1 decade ago

    You will not get a mortgage as lenders require you to have an employment history of at least two years. Also, you would need 20% as a down payment and extra resources for closing costs and other funds.

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  • 1 decade ago

    Look for a realtor in that geographical area, ask if they'll be your "buyer broker" - they'll explain all the stuff you can and can't do, and you'll pay them a 3% commission knowing you got the best deal, when you purchase your first home.

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  • Jeff T
    Lv 6
    1 decade ago

    If your wife gets pregnant after you get married, will she still work?

    If no, then I would buy a house based on the husband's income alone.

    Rule of thumb: $52,000 income = $104,000 mortgage, plus your down payment.

    The banks will offer a whole lot more, but if you take the bait, the house will own you.

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  • Anonymous
    1 decade ago

    The best thing to do is how much money will you have by that date.

    Make an estimate and look at real estate booklets and websites to know the rough price of your dream home.

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  • Anonymous
    3 years ago

    Extremely interesting question, hopefully we get some good answers

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  • 4 years ago

    Plenty of great answers already for this

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