E174: How much Income do I need to make to Buy? DETAILS

Folks keep reaching out to David Sidoni with the first-time home buyer’s biggest question: “How much home can I afford?” 

Well, David has created a lot of podcasts about it, so you should totally go check those out. They’re super helpful and will give you some tips and ideas on how to answer that question. So, this podcast will be all about the numbers. Keep listening to get the data and formulas that will help be a GUIDE (not the rule) for you as you determine how you should prepare for purchasing your first home.

Here are some power takeaways from today’s conversation:

• A recap of the last affordability episodes
• Emphasis on the fact that these are guides, not rules
• The NUMBERS
• It’s up to you how much you’re willing to pay

Episode Highlights:

[01:27] A Quick Recap

First-time home buyers everywhere have one big question: “How much home can I afford?” That’s an excellent question, which is why David has a couple of episodes covering that exact topic. While it’s a common question, there’s one thing that David has said before that he’ll say again: there is NO perfect answer to this. Everyone’s situation is uniquely different and requires an individualized plan, so today’s look at the data just gives you a guide as you navigate your own circumstances. 

[03:42] The NUMBERS 

According to the mortgage rates on March 27, 2023, the day David recorded this episode, here are some of the deets:

If you have a 760 credit score, zero debt, you want to spend almost 50% of your monthly income on a mortgage, and you can put 20% down on a home, firstly - you’re a perfect person and probably not real. If you check all these boxes and have a combined household income of $93,600 a year, then you can afford a $600,000 home. This might sound like a fairytale and that’s because it kind of is. It’s likely that you don’t check every single box and that’s okay. It just means that you need a different plan for your situation. This is a guide, remember?

[14:58] It’s Up to YOU

If you see those numbers and are starting to freak out - don’t. Print the numbers out and put them on your wall if you want, but only look at them as a goal to work towards, not necessarily your own personal plan. By the time you hear this podcast, the numbers will already have changed. So, maybe don’t hang them up anywhere? It’s up to you. Just remember, that you also decide how much home you can afford. Maybe you can afford a $600,000 home. But, based on how much is leftover after taxes, do you want to?

For March 27th 2023 – and no longer to be used as a resource in any way shape or form after that time!

Listen to the podcast!

$600k SFR @5.99% 20% down

• No Debt: monthly income of $7,800 47% DTI $93,600 Annually
• $500 monthly debt: monthly income of $8,700 47% DTI $104,400 Annually
• $1000 monthly debt: monthly income of $9,800 47% DTI $117,600 Annually
• $1500 monthly debt: monthly income of $10,800 47% DTI $129,600 Annually

$400k SFR @5.99% 20% down

• No Debt: monthly income of $5,100 47% DTI $61,200 Annually
• $500 monthly debt: monthly income of $6,200 47% DTI $74,400 Annually
• $1000 monthly debt: monthly income of $7,200 47% DTI $86,400 Annually
• $1500 monthly debt: monthly income of $8,300 47% DTI $99,600 Annually

$200k SFR @5.99% 20% down

• No Debt: monthly income of $2,550 47% DTI $30,600 Annually
• $500 monthly debt: monthly income of $3,650 47% DTI $43,800 Annually
• $1000 monthly debt: monthly income of $4,700 47% DTI $56.400 Annually
• $1500 monthly debt: monthly income of $5,800 47% DTI $69,600 Annually

$600k SFR @5.99% 5% down

• No Debt: monthly income of $8,800 47% DTI $105,600 Annually
• $500 monthly debt: monthly income of $9,800 47% DTI $117,600 Annually
• $1000 monthly debt: monthly income of $10,950 47% DTI $131,400 Annually
• $1500 monthly debt: monthly income of $12,050 47% DTI $144,600 Annually

$400k SFR @5.99% 5% down

• No Debt: monthly income of $5,800 47% DTI $69,600 Annually
• $500 monthly debt: monthly income of $6,900 47% DTI $82,800 Annually
• $1000 monthly debt: monthly income of $7,950 47% DTI $95,400 Annually
• $1500 monthly debt: monthly income of $9,100 47% DTI $109,200 Annually

$200k SFR @5.99% 5% down

• No Debt: monthly income of $2,920 47% DTI $35,040 Annually
• $500 monthly debt: monthly income of $4,000 47% DTI $48,000 Annually
• $1000 monthly debt: monthly income of $5,080 47% DTI $60,960 Annually
• $1500 monthly debt: monthly income of $6,150 47% DTI $73,800 Annually

Resources Mentioned:

https://www.howtobuyahome.com/podcast/