Minimum Earnings Needed For $250k House
Minimum Earnings Needed For $250k House: Introduction
If you are looking to purchase a home for $250,000 then you are going to need to know the Minimum Earnings Needed For $250k House. Before ever purchasing a home, it is a smart decision for you to put your finances out on the table and know how to calculate just how much you can afford and that that housing payment will be. It is nice to want a home for $250,000, but if your income can only support $200,000 it is better you know sooner than later so that you aren’t disappointed down the road after settling on a home you can’t afford. We will go over the numbers and logic in the coming paragraphs, but if you have any questions at any time, please call me directly at 888-900-1020, email me at firstname.lastname@example.org, or visit my website www.loanconsultants.org for more information regarding real estate and mortgage news.
Minimum Earnings Needed For $250k House: Which Loan Is Right For Me?
If you are looking to determine Minimum Earnings Needed For $250k House then putting together the entire equation is key to determining how much home you can afford. The first thing I suggest is getting your credit pulled to see which loan program will best fit you. In most cases if you have 700+ FICO score then a Conventional Loan would work best for you at a 45% debt to income ratio and if you are in the 620-660 FICO range, then the best loan for you would probably be the FHA Loan with a 56.9% debt to income ratio. If you are a first-time home buyer you can get a Conventional Loan with as little as 3% down ($7,500) and with 580+ FICO you can get an FHA Loan with 3.5% down ($8,750).
Minimum Earnings Needed For $250k House: How Much Can I Afford?
When trying to determine Minimum Earnings Needed For $250k House you need to first realize how your affordability works.
- You will need to know your monthly gross income or pre-tax income. This is vital because for mortgages, your pretax income is what is used to base your affordability.
- Calculate monthly payment for all revolving (credit card) and installment loan debt (auto, student, etc.)
- Take monthly debt and divide it by your monthly gross income. This number is the percentage of monthly income going to service your existing debt.
- Use an existing mortgage calculator to determine the mortgage cost for your mortgage minus the down payment. You will also have to factor in the amount needed for property taxes (use 1.50-2% of purchase price if property tax data isn’t provided). Finally you will also need to figure out the insurance per month and mortgage insurance.
- Take your mortgage payment and add it to your monthly debt and then divide it by your gross monthly income. If your resulting percentage is less than the limits in the previous paragraph then you are in business.
Minimum Earnings Needed For $250k House: The Formula
When looking at the formula, we will use an FHA Loan as an example. Let’s say you make $6,000 per month gross income. The PITI (principal, interest, taxes, insurance) would be about $2,000 per month. If you have $1,500 per month in debt, when you add the mortgage payment to it you are at $3,500. If you divide $3,500 by $6,000 you are at 58.3% which exceeds the FHA Loan Limits. This file would not be approved since you exceed the 56.9% loan limits for debt to income ratio. However, if you brought your monthly debts down to $1,000 you would then have a 50% debt to income ratio which would get you approved.
Minimum Earnings Needed For $250k House: Conclusion
As you can see, there is a lot of number crunching in order to get Minimum Earnings Needed For $250k House. If you know what you are looking at and how to calculate it, you can easily use Excel to price out every scenario that might come your way. Granted, just because you can afford a home doesn’t necessarily mean you will get approved as there are plenty of other factors going into a mortgage getting approved. I am here to help you every step of the way in your home buying journey. Get in touch with me to get the process started ASAP. Call or text me at 888-900-1020 or email me at email@example.com.