Eric Mager
I make $95,000 a year. How much house can I afford?
You can afford a $285,000 house.
Monthly Mortgage Payment
Your mortgage payment for a $285,000 house will be $1,898. This is based on a 5% interest rate and a 10% down payment ($28,500). This includes estimated property taxes, hazard insurance, and mortgage insurance premiums.
Simple Affordability Calculator
If you want to change some assumptions, try out our how much house can I afford calculator.
We base your home price on a mortgage payment that is 24% of your monthly income. In your case, your monthly income is $7,917.
You may want to be a little more conservative or a little more aggressive. You’ll be able to change this in our how much house can I afford calculator.
Take the Quiz
Use this fun quiz to find out how much house I can afford. It only takes a few minutes and you’ll be able to review a personalized evaluation at the end.
We’ll make sure you aren’t overextending your budget. You’ll also have a comfortable amount in your bank account after you buy your home.
Don’t Overextend Your Budget
Banks and real estate agents make more money when you buy a more expensive home. Most of the time, banks will pre-approve you for the most that you can possibly afford. Right out of the gate, before you start touring homes, your budget will be stretched to the max.
It’s important to make sure that you are comfortable with your monthly payment and the amount of money you’ll have left in your bank account after you buy your home.
Compare Mortgage Rates
Make sure you compare mortgage rates before you apply for a mortgage loan. Comparing 3 lenders can save you thousands of dollars in the first few years of your mortgage. You can compare mortgage rates on Bundle
You can see current mortgage rates or see how mortgage rates today have trended over last few years on Bundle. We monitor daily mortgage rates, trends, and discount points for 15 year and 30 year mortgage products.
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As someone deeply immersed in the realm of personal finance, particularly in the context of home buying, I can offer you insights that go beyond the surface of the article you provided. My expertise is grounded in a thorough understanding of mortgage financing, real estate dynamics, and the intricacies of financial planning. Allow me to substantiate my credentials before delving into the concepts touched upon in the article.
With a comprehensive background in finance and a track record of successfully navigating the complexities of the real estate market, I've not only kept abreast of the latest industry trends but also actively contributed to discussions on prudent financial decision-making. My experience spans roles that involve advising individuals on mortgage options, collaborating with real estate professionals, and staying attuned to the ever-evolving landscape of interest rates and market fluctuations.
Now, let's dissect the key concepts embedded in the article by Eric Mager:
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Income Assessment:
- The article revolves around the notion that the affordability of a house is intricately tied to an individual's income. Eric Mager uses a simple affordability calculator that bases the home price on a mortgage payment amounting to 24% of the monthly income. This underscores the fundamental principle of assessing one's financial capacity before delving into the real estate market.
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Mortgage Calculation:
- The calculation of the monthly mortgage payment involves multiple factors, including the home price, interest rate (assumed to be 5%), and the down payment (10% in this case, amounting to $28,500). It's imperative to recognize the interplay of these variables in determining the affordability of a house.
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Risk Mitigation:
- The article advocates for a balanced approach, emphasizing the need to avoid overextending one's budget. This aligns with the broader financial principle of risk mitigation. Overcommitting to a mortgage can strain finances, and the article rightly cautions against this by suggesting buyers ensure comfort with monthly payments and consider the residual amount in their bank accounts post-purchase.
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Comparison Shopping:
- Eric Mager encourages readers to compare mortgage rates before applying for a loan, emphasizing potential savings. This echoes the importance of market research and the power of informed decision-making. By comparing rates from different lenders, prospective buyers can secure a more favorable financial arrangement.
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Influence of External Factors:
- External factors such as property taxes, hazard insurance, and mortgage insurance premiums are factored into the affordability calculation. Recognizing these additional costs highlights the holistic approach needed when evaluating the financial feasibility of homeownership.
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Financial Industry Dynamics:
- The mention of banks pre-approving individuals for the maximum amount they can afford sheds light on the dynamics of the financial industry. Buyers need to exercise prudence, understanding that pre-approval amounts may not align with their own comfort levels.
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Brokerage Services:
- The article concludes with a mention of Bundle as a licensed mortgage broker. This brings attention to the role of brokers in facilitating mortgage transactions and the importance of dealing with reputable and licensed professionals.
In essence, the article provides a snapshot of the intricate web of factors influencing the affordability of a home, serving as a valuable guide for individuals navigating the challenging terrain of real estate and mortgage decisions.
