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Reply to "How much mortgage can we afford?"
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[quote=Anonymous][quote=Anonymous]HHI - $300k Student debt - $250k Car debt and other debt -$50k Retirement fund, IRAs and 401k balance- $170k Monthly fixed expenses: $4k [/quote] Why does everyone complicate this so much? There is a tried and tested 28/36 guideline on home affordability. Let’s just apply that…. Baseline PITI = 28% x (HHI/12) = $7K With a 30 year mortgage at 7.25%, this works out to be a roughly $870K maximum mortgage, assuming $1000 per month for HOA, insurance, and property taxes. Unfortunately, you have student loan debt and this must be subtracted from your mortgage allocation: $870K - $250K = $620K Therefore, the largest mortgage you can afford to take is 30 year $620K @ 7.25%. Assuming you put 20% down, the maximum house you can afford is $620K / 80% = [b]$775K with a $155K down payment[/b]. This will stick you with a monthly PITI of just over $5K, leaving you with maybe $10K net per month to cover your car, student loans, and other expenses. [/quote]
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