I’m thinking of buying my first home next year in sacramento. I’m hoping to see a significant drop from current prices. I make the median income (~$54,000). In 1 year, I’ll have ~$35,000 in savings and ~$5,000 in my 401k. I’m 23 years old and have been working at my job for 1 year now. I currently have a credit score of 780. My only debt is $8,000 in student loan at 4.5% interest. I’m willing to make monthly payments of ~$2,200. I might move in a few years. What kind of a loan can I get? Which programs are best for my situation?
Thank you for reading.
You can afford a house payment of about $1,500 per month – 30% of your monthly income. Any more than that and you’re asking for trouble.
The 5K in the 401K you do not touch! You could qualify for about 150-200 K unless you want to put the entire 35K into the loan.
Use this calculator to see what payments will be. http://www.bloomberg.com/invest/calculators/mortgage.
Know also, that owning a home has hidden cost,insurance, taxes, utilities, repairs. Please don’t forget the market will still be coming down.
I suggest you wipe out the $8000 loan in advance, so you can have one less debt. I too, believe $2200 is to high of a burden. The lenders have there criteria, but usually 24% of income, and 35% of all debt.