This is a YouTube video titled "How Much of a Home can You Buy 🤔🏠" containing a detailed explanation about home affordability and mortgage qualification. The speaker breaks down how income, debts, and debt-to-income ratios affect the amount of house one can afford, using a practical example with a $60,000 annual income. The content is educational and aimed at helping viewers understand mortgage qualification basics.
How much of a house can you afford? Now we hear it probably daily where people reach out and say, hey, I make this much money, how much of a house can I buy? I wish it was that easy. Well, maybe I don't because we probably wouldn't have a job for very long. But there is a little bit more to it. So let's just break down an example here. Let's say you make $60,000 a year of gross or pre tax income. And let's just assume that credit and down payment are fine. The last big piece to qualify for a home is the debt to income ratio or the monthly budget. So take that $60,000 a year, divide by 12 months. That's $5,000 a month of gross income mortgage. Type your conventional FHA, VA, USDA, they all had different thresholds. I'm going to use conventional because that's by far the easiest one to understand. They all are very similar. Virginia has their own way of doing it. We'll do a different video on that. But for the most part they all have a similar game plan. There's different threshold conventional financing, which is the most common of home loans. It allows you to go up to 50% of your gross monthly income for all payments, including the new mortgage payment. So you take $5,000 a month of income times 50%, that's $2,500 a month. That's the line in the sand. You have to fit all other payments within. Now let' you have a $300 car payment, so subtract that out of 2,500. Let's say that your minimum credit card payments are $100 a month combined. And again on credit cards, for example, I mean, most everybody has them. We don't look at the balance, we don't care about the balance. It's just the minimum required payments. So sometimes it's not as bad as you might think. And let's say you have a $20,000 student loan, but let's say it's deferred, you're not actually making payments. In the mortgage world, we have to add a half percent or 0.5% estimated monthly payments. That'd be $100 a month for that. The reason being they want to make sure that when those payments do re engage and you actually start paying them, you'll still be able to afford your house. So it' forward looking there. So you tally all those up in this example, that's 500amonth to other debts. So we were at $2,500 a month minus 500, you have $2,000 a month you could spend on a mortgage. If you have three, three and a half percent down payment, that gets you around a $250,000 house for most parts of the country. That's how it works. It scales up and down with different income, different debts. The important thing, though, is reach out to a lender because there's sometimes we can tweak the income up and add more on. We can sometimes exclude or not look at certain debts, so it's not all at face value, but that's the basics of how you qualify for your home loan.
