How much would you have to make to buy a $250,000 house?

[loulou]

So how much would you have to make to feel comfortable with a $250k house? I'm curious.

[sweeps]

Not enough information. How much are you putting down? What are your other expenses? How much is in the bank? (If I had $2 million in the bank, I might not need any income.)

[momof1in150]

The old formula is about $83K (A simple formula for affordability is 3 times your annual salary). That is part of the problem with the housing market came in - people were buying houses 4-7 times their annual salary and getting an ARM so that it seemed like they could afford it until the ARM adjusted.

[arthurb999]

depending on how much debt and what kind of lifestyle you have... 100k seems about right for that.

[lennygaudy]

We make about $120k as a couple and were able to buy a $280k house. Granted the house does have an income property which we rent for $500/month which really helps. But we also made less money than we do now 5 years ago when we bought it. Like arthurb999 said it will all depend on your other expenses and lifestyle. For example, we don't have any car payments because both of our cars were bought used and paid off so that also keeps our monthly expenses lower than most people's.

[thekid]

Fully dependent on your cash down, savings and other living expenses.

Especially the cash down, I mean the purchase price isn't really relevant for affordability calculations, it's the amount financed.

[tripods68]

Good rule to have: Debt to income ratio should be 36% or below.

[MonkeyMama]

I have to agree - depends depends depends.

Fixed rate interest rates are very low though. Which increases the affordability factor. Down payment and other debt are pretty large factors. Rents & home prices in your area are another factor. Property taxes? How will it affect your income taxes? Is it a fixxer upper?

In some instances, $70k income may be more than plenty. (We bought 2 homes in the $260k range - different times - averaging $70k income. The mortgage payment is only 15% of my gross income today - not exactly a stretch). For one, the mortgage and property taxes decrease our income taxes to virtually zero. It's not exactly apple to apples as far as renting and paying a ton more income tax. I wouldn't have spent so much on a home that neede fixing though, either. There can be a lot of hidden costs with a home. (But yeah - we put a lot down. Thing is if you can put a lot down, generally you can afford a bigger mortgage more easily).

[creditcardfree]

We make about $86K and I would NOT be comfortable with a $250K home. I would probably have the 20% down...but I still wouldn't be comfortable.

I'm realizing as I get older that I'm less likely to want to take out a 30 year mortgage, next time we move. So, borrowing at 15 years is a much larger payment than on a 30 year term.

I agree...it all depends.

[disneysteve]

The old formula is about $83K (A simple formula for affordability is 3 times your annual salary).

Call me old-fashioned, but I agree. 2-1/2 to 3 times annual income is the limit in my mind. So a minimum of about $83,000. Personally, I think that can still be pushing it depending on circumstances, but I wouldn't argue with that.

[sheridan15926]

I think it all depends on your financial picture as a whole. We are a single income family, with that single income being in the low six figures. We just bought a house for $430K, but we put 20% down. Our payment will be less than $2300 a month, and that is extremely doable for us. But, we also have no car payments or student loan payments, and we pay our one credit card off in full every month.

You have to look at the whole picture...how much you have to put down, how much your take home pay is, and how much other debt you have.

[kork13]

Fixed rate interest rates are very low though, which increases the affordability factor.

What I'm NOT looking forward to is when the pendulum swings the other way... inflation goes nuts, fed rates go high, and mortgage rates right along for the ride..... With my luck (btw, happy St. Patrick's day everyone) those factors will be peaking right as I'm finally ready to buy a house myself.... hahaha


As to the main topic, rules of thumb (such as the 3x your income one) are completely rough estimates. this one, however, it's not bad.... When I buy (5-10 yrs from now?), I'll probably take that into heavy consideration.

[mnpqrd]

This calculator could help you figuring out if you can afford it or not.
realestate.yahoo.com/calculators/afford.html

[mnpqrd]

Here is another calculator. This one estimates property tax and insurance but it's for 30 year loan.
cgi.money.cnn.com/tools/houseafford/houseafford.html

[whitestripe]

DF and I borrowed $304k and we make $84k combined per year.