Buying A New House

Do you want to own the American dream....buy a new house? Many people do, but do not know how much of a home they can afford. The following article should help you determine how much of a home you can afford to buy.

In the market for a home? Many Americans may be thinking of buying a home, but are hesitant of buying because of the price. Can you afford a home? And how much of a home can you afford to buy? We have done the number crunching, you just need to read on to determine if you have the money to buy a home.

These numbers are designed to help homebuyers determine the amount of mortgage they can qualify for. Assuming you spend 33% of your income on housing (which is typical), and also assuming a down payment of 20%, this is what you can expect to buy. If you earn $30,000 a year""at an interest rate of 7%-- you can afford a house of $102,613. For each additional $5000 you make, you can raise the home price roughly $17,000. Making $200,000 a year? You can afford a house worth $684,136. $75,000 a year? You can afford a $256,533. For an interest rate of 8%, the home price can rise roughly $16,000 for $5000 dollars you earn. Homebuyers may qualify for more or less than the amounts above depending on the person's credit history, employment stability, amount of down payment, and type of loan they are considering.

Now how much will that mortgage be? At 6%, add 30 dollars for each $5000 of loan you have. As the interest rate rises, add an extra $2 per $5000 loan for each half percentage point. For a $90,000 loan at 6%, you will only have to pay $540 per month. That is less than most apartments.



Remember that these amounts are for principal and interest only. There are many other costs to owning a home, including taxes, insurance and closing costs. But these figures should give you a good idea as to whether or not you have the money, to own a home.

Trending Now

© High Speed Ventures 2011