• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

How Much Income Do You Need To Buy A House?

October 8, 2012 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email

Home Loans are made against your ability to repay. While the mortgage loan is secured against the house, it is really made against your income. That’s what mortgage lenders are look for, income to offset liabilities. Yes, a house payment is liability for a borrower. Oftentimes, there is a disparity between how much house you “want” and how much house you “can” purchase given your gross monthly income, payment comfort level, consumer debt obligations and amount you are looking to borrow.

 

How much income you need to purchase a house will vary by your payment comfort level including any consumer and or other monthly debt obligations you might have.

Some Important Terms To Understand:

Mortgage Payment:  principal, interest, property taxes insurance and mortgage insurance if needed

Consumer debts: minimum payment obligations on things such as auto loans, credit cards, student loans, personal loans, installment loans

Other debt obligations:  alimony and/or child support or any other court ordered repayment obligation

 

Here’s  simple mathematical formula:

(Target Mortgage payment + consumer debts) ÷ .45 = Gross Monthly Income needed to qualify

 

Running the math….

If your target mortgage payment is $2000 per month and you have consumer debts of $300 per month, you will need $5111 gross monthly income to offset your housing expense and consumer obligations.

 

How Much Loan Amount For How Much Payment

*Loan Qualifying Tips

  •  For every $100 in mortgage payment you need approximately $225 in income
  •  For every $100,000 financed expect a mortgage payment of approximately $725 per month

Based on these tips (assuming no consumer debt):

One could estimate in order to borrow $300,000 expect a mortgage payment of $2175 per month. To increase the mortgage payment (raising purchasing power) by $100, you’ll need an extra $225 in monthly income.

 

That is only half of the equation…

 

Down Payment becomes another important factor in determining how much income is needed to buy a home.

There are various programs with varying down payment requirements. Consider the following possibilities using a purchase price of $300,000 (assuming no other debts)

 

Conventional Loan 5% down/$15,000– approximate mortgage payment$1863 per month

→Gross Monthly Income Needed: $4140

Government FHA Loan3.5% down/$10,500– approximate mortgage payment of $2007

→Gross Monthly Income Needed: $4460

Government USDA Loan 0% Down/no down payment required-approximate mortgage payment of$1833

→Gross MonthlyIncome Needed: $4073

 

So at the end of the day how much income you need to purchase a home is predicated on your monthly income, consumer debt obligations and down payment.

*For every dollar of debt, you will need double that in income.

Here’s  an example:

$300 car payment needs at least $600 per month or more in income to offset the car payment

*Debt erodes income, less income translates to less purchasing power

Does buying a home make sense?

Yes, so long as the amount you can borrow for your desired purchase price is in sync with your debt obligations and of course your down payment. Discover how much you can borrow today by getting a complementary pre-qualification online. See how much income you need to buy a home now!

 

 

 

 

 

 

Related Mortgage Advice from Scott Sheldon

  • What Is A Debt to Income Ratio?

    A debt income ratio, DTI for short, is the percentage of your gross monthly income…

  • How Much Will It Cost
    Quick Calculation For Determining House Payment

    As consumer taking out a mortgage loan, computing a house payment can be a time-consuming…

  • Want the Best Mortgage Rate? Let's Talk Monthly Debt Oligations

    Sonoma County Mortgage Rates are quite low. In fact locking-in a 30 year fixed rate…

  • $72,000 Income: How Much House Payment Can I Qualify For?

    This it depends on all four factors of creating a mortgage, credit, debt, income and…

Filed Under: First Time Home Buyers, Loan Qualifying, Pre-Approval Tagged With: buying a house, preapproval to buy a home, qualifying for a mortgage

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
2455 Bennett Valley Road C107
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2023 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window