Posted April 9th, 2005 @ 11:59pm by Erik J. Barzeski
Question: Ever applied for a mortgage? If so, how much were you approved for as a % of your yearly income (i.e. $40,000 -> $150,000 = 375%)?
My Answer: No, I haven't. I've heard that you can "afford" a mortgage of 3x (300%) your yearly income, but I know of people who have been approved for 5x quite easily.
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Posted 10 Apr 2005 at 12:53am #
SoCal: mortgage / (me + wife) = 328%
Posted 10 Apr 2005 at 10:24am #
3x your income is the rule of thumb -- we were approved for about 4.5x our income at the time, but bought a houe that was 2x our income -- we didn't like the idea of a monthly check for over $1000. It's worked out well too -- remember your situation could change. We now have one income (mine), she's a stay at home mom, and my income is less now than it was ttwo years ago (I left my job to become a freelance developer). We're very glad we didn't take what they offerred. It would be way too much financial strain.
Posted 10 Apr 2005 at 11:08am #
I was approved for about 3.9x my income. I ended up buying a house with a mortgage that was about 2.7x my income.
For our situation, Mrs. Eagle doesn't work, so we considered that when taking on a mortgage.
Anyway, we ended up doing an 80/15/5 loan, which allowed us to put down only 5% and avoid PMI at the same time. The 15% loan is at a higher interest rate and will eventually be folded into the primary mortgage when we reach 80% LTV, which is probably any day now - I should have an appraisal done - which will help out nicely.
Posted 12 Apr 2005 at 10:53pm #
Not yet.
I take it you are talking about a thirty year mortgage though, right?
I hope to end up in a situation like Eric where I can afford to purchase a home that has mortgage payments that are much less than three times my income, but allows for prepayment of the loan without penalty. That way there is no financial pressure on my fiancee and I and we can pay off more if we choose to do so. I'd also love to have a seven or fifteen year mortgage instead of a thirty year.