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Do you want tobuy a house?
Start by figuring out how much house you’re able to afford.
However, youll also need a 20% down payment.
Because that what the banks are looking for, she said.
Say you earn $100,000 a year.
That means your total home purchase price gets capped at $400,000.
But remember the down payment.
You should ideally have 20% down, as well.
On a $400,000 home, thats an $80,000 down payment.
On a $200,000 home, thats a $40,000 down payment.
FHA Loans Are an Option
Saving 20% for a down payment isnt feasible for everyone.
According to theNational Association of Realtors, the median down payment across all buyers is 18%.
For first-time buyers, its just 9%.
If you cant save that much, you still have options namely an FHA loan.
These loans typically have fewer requirements than conventional mortgages.
You could potentially qualify with as little as3.5% down, depending on your credit score and other factors.
The problem with the FHA loan is your closing costs are going to be slightly higher, said Corcoran.
According to her, most loans have closing costs of about 3.5% of the property purchase price.
FHA loans require additional insurance, which can tack on an additional 2% to closing.
attempt to keep this as low as possible, because it can affect your mortgage affordability.
Calculate your DTI by dividing your total monthly bills by your gross monthly income.
Be sure to include things like interest, taxes and insurance in that monthly mortgage payment.
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