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   HOW  MUCH  HOME  CAN  YOU  AFFORD? 

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 Use this form as a worksheet
                 
              DEBT NO DEBT
          Spouse 1 Spouse 2 COLUMN  A COLUMN B
  Annual gross income before taxes:          
 

Divide by number of months/yr:

 divide by 12 divide by 12
 

Put monthly gross in each column Total Gross Monthly Income

 A B
 

In situation of  "No Debt"  many lenders require that 28% of your monthly gross income should be reserved for your total house payment, including taxes and insurance. Multiply Box B by 28%: 

 x .28  

  Maximum monthly housing expense -- No  Debt

    
In situation of "Debt"  where you have a number of monthly payments  then lenders require 36% of monthly income
 When you have a number of monthly payments "Debt" then lenders require 36%  of monthly income be set aside.  Therefore, multiply the gross monthly income in column A  Box A by 36%:

x .36  

  

 Long-term monthly expense allowance -- With Monthly Debt

C

  

 Figure  your monthly long-term debt payments below and subtract  from long-term monthly expense allowance 
           
           
           
           
           
           
           
           
   Total  monthly debt payments, and subtract from Box C   

Enter same number
as above
  Monthly  housing expense allowance -- Debt / No Debt    
  Enter the smallest number in column A or B in box at right    
  About 20% of housing expense is for taxes and insurance.  This leaves 80% of monthly allowance for mortgage payments (principle & interest) 

x .80  

x .80  

 

  This is the  mortgage payment you can afford

  

 
   Now enter each of these values in the mortgage calculator to get your affordable mortgage amount.  Also the interest rate and the term of the loan (usually 30 years). The mortgage amounts obtained from the calculator are $121,210 and $218,490 for Debt or No Debt situations respectively and are entered in the boxes at the right >>>>

D

E

   To get sales price of an affordable home, divide  Box D  and  Box E  by .97 if you intend to make a 3% downpayment   ( or by .9 if 10% D/P    .85 for 15% D/P    .80 for 20% D/P and so on )  
  The sales price of a home you can afford:  F G
 

 Thje maximum list price of a home  to look at is
 ( Box F and Box G  times 1.03  to 1.05)

    
 

 This assumes that the home is listed 6% over the real market value. In 1999 and 2000 the average home is selling  for about 95% to 97% of the listed price in Martin County, Florida. 
 
 

Calculate Cash-To-Close.
   % down payment  times Box F and Box G

    
 

 Loan settlement expenses are about 5% of  loan amount: 
Enter 1.05 times Box D and Box E
 

The Cash Needed To Buy The Home Is  

Sum Of the 2 boxes above 

Sum Of the 2 boxes above 
  With Debt No Debt

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