(Not for me, BTW)
If you know how much of a mortgage payment you can afford, can you guestimate your total pricepoint?
Figures out how much you can borrow, so that amount plus your down payment is the price point you can look at.
Super-simple is just 3 times your yearly salary.
Thanx SDT! But I will check the link in the post above you.
That may be simple, but perhaps too simple. There’s a big difference between a simple 3.5% mortgage and one at 5.5% with $3,000 a year in PMI.
For the OP: Whatever the calculators tell you about the monthly payments, plan on putting an extra $100 (or more) into the payments. Even a small increase like this cuts the actual time until pay back, and it also means that you can handle some increases in property tax and insurance rates without cutting into your overall household budget.
IMO, banks are pretty generally willing to lend considerably more than I believe most people have any business borrowing.
I think I was most recently approved for something around 5 times my salary.
Give serious thought to the type of life you will be living should you have to make the payments on the maximum a bank will lend you.
JMO.
Other things to include in your budget:
PMI (if you’re down payment is less than 20%)
Insurance
Property taxes
Upkeep/maintenance costs
Possible association fees
Closing costs
This. Before you even think about buying a house, find out how much a new roof costs, and how long they last. Also, do the same for water heaters and furnaces, including the installation. Figure out how much a plumber charges just to come look at whatever is spewing water all over your house.
NOW try and come up with a reasonable amount to set aside for maintenance.
When I bought my house, I borrowed considerably less than I could have qualified for. It is a big enough house in a nice enough neighborhood. I was able to keep up the payments when I was off work for two different six month stretches, and not deplete my savings.
It is now paid off, but never once have I thought “I wish I had a bigger mortgage so that I could live in a nicer house.”
Even though I could have borrowed 50-75% more, it was still rough going the first year. Lots of things to spend money on when you first buy a house. A lawnmower here, a garbage disposal there, oops, now the swamp cooler died. Those folks that max out what the banks will loan, I don’t honestly know how they do it. Apparently in many cases the answer is “They don’t!”
Yes, when you move into a new house you will learn the way to your local hardware store very well.
There is one other factor, which is your job prospects. If you feel you are on a growth path, you might want to allow yourself to be a little more squeezed than if you feel you are pretty much locked into getting no more than inflation level raises or below. You need to be honest with yourself about this. Another factor is inflation. If you have a fixed rate mortgage, you win with inflation since payments decrease as a percentage of your salary. It is tougher with today’s low inflation rate - but you win by low mortgage interest rates.
This is another reason why simple X times salary calculations don’t work.
What else is included in the monthly payment (beyond the mortgage itself) will vary depending on your location, choices of payment options, and Loan-To-Value ratio. For the last couple of houses I’ve bought, insurance and taxes have added about 16% to each payment, and the number varies a little year to year as insurance and property tax assessments change. Start with the calculator, add 15% without PMI and 20% with, and you’ll be close.