How Much House Can YOU Actually Afford? (by average income)

Wondering how much house you can actually afford based on your average income? In this video, we break down the mortgage approval process to help you determine the ideal home budget for your financial situation. Discover the key factors that influence affordability and get expert insights on calculating the perfect house budget. Whether you’re a first-time buyer or looking to upgrade, understanding how much house you can afford is crucial.

👉 Do you Need an Agent Referral? https://bit.ly/43q6P1y

ℹ️ Home Buyer Tools

👉Sign up for my Weekly Newsletter for Real Estate Advice (that doesn’t suck): https://bit.ly/3rDYvxP

👉 Home Affordability Caculator: https://bit.ly/43tfGzv

👀 VIDEOS TO WATCH NEXT: Avoid These 5 Costly Mistakes as a First-Time Home Buyer!! https://youtu.be/v5O0ypVywPE

😇 Work with Alex in Denver, Colorado

👉 Search for Denver Homes: https://bit.ly/3jpsRRh

🤔 Connect With Me

📱 Call or Text: 303-552-4804

📧 Email: alex@reframingrealestate.com

📅 Schedule A Call: https://bit.ly/3jhJ6je

Full Transcript:

are you wondering how much house you can afford and instead of going to a lender or a mortgage broker you’re here on YouTube poking around wondering if you can find the answer it’s okay I do that sort of stuff all the time well we’re gonna break it down for you in the easiest manner possible no crazy rules of the 3033 or the 222 rule there’s one rule them all and it’s real simple and we’re gonna look at what that can buy you in different states across the U.S so you can find out if you need to be in something like this or if you got to be in something like this so here’s the one simple rule on how to figure out how much you can afford each month without going into a bunch of crazy details you know for all that go talk to a lender go do your thing before you start going out and looking at houses because that’s the number one biggest mistake I see people make is that they start looking at houses before they know what they can actually afford who’s the 28 rule okay so what that states is that no more than 28 of your gross income should be spent on the mortgage so in this example if you made a hundred thousand dollars a year that would mean the total monthly payments you should be making should total twenty three hundred dollars now that’s not calculating in your down payment or any other debts that you have but it does affect the amount of house that you can afford so in this example earning a hundred thousand dollars a year and putting down twenty thousand dollars spoiler alert that’s less than twenty percent on this house calculating in just 500 of other other debts that you may have from a car or a credit card payment figuring out two hundred dollars a month in property taxes now this is going to be a big one that varies and we’ll talk about this more in a second but property taxes vary greatly amongst the different states and that’s going to affect how much house you can afford figuring in 150 a month for homeowners insurance that kicks out the monthly payment of 233 with a home purchase price ceiling of three hundred and eighteen thousand that is what you can afford on a hundred thousand dollars a year in this example I don’t know about you guys that kind of feels like a little bit of a kick in the nuts

I mean six figures used to be a decent amount of money fifteen twenty years ago but 318 000 in this example with extremely low property taxes not a ton of debt you know that’s getting you twenty percent below the national median home price today so kind of wild and in this example we can play with the down payment and let’s say we do want to put 20 percent down because that’s going to save us on prime mortgage insurance so we’re going to pay a little bit less well in this case we can put 80 000 down more so going from 20 000 up to a hundred thousand and basically we’re going from a 318 000 house up to a four hundred thousand dollar house so really we’re only gaining the additional money that we’re putting down in our purchasing power if you want to be at 20 down and I have a link in the description below where you can use this calculator to plug in your personal numbers so you can join the rest of us in our disappointment at how little house we can afford and if you think you have a house that sold for crazy dollar amounts drop it in the comment below I’d love to hear it we’d all love to take a look at it because I know Nationwide everybody thinks real estate prices have just gone berserk now and to the fun part what can your income actually afford you in different parts of the country well I pulled up a list of median household incomes in the United States so in Washington DC see if you make the median household income of 88 311 which isn’t even really a state but you know let’s look past that for a second and you were to make a down payment of twenty percent approximately or eighty thousand dollars would kind of kind of fudge with the numbers making the Assumption you have no other monthly debts just to make it easy no car payments no credit card payments figuring out the monthly property tax which in Washington DC isn’t that bad so 180 a month approximately 150 a month for homeowners insurance no HOA in this case it’s saying you could afford a house up to three hundred and forty thousand dollars okay or two thousand sixty dollars a month now what can that actually buy you in the great District of Columbia well it might be a little shocking so on Redfin we have this charmer here for three hundred thousand dollars it’s a one bedroom one bath cozy 370 square foot condo now it looks great I mean they did the kitchen remodel and I’m sure that kitchen cost seventy five thousand dollars because it is just so big I mean you folks living in Texas right now your pantry is more than 370 square feet but you’re looking at me going but Alex you said we can afford 340 000 yeah that’s without an HOA payment an HOA payment on this property is a measly 100 a month doesn’t sound like much does it well when we come in and we make our adjustment in the calculator just for an additional 100 a month that kicks us out a new number saying we can afford three hundred and twenty five thousand dollars and if condos and HOAs just aren’t your thing you’ve got something like this townhouse on the north side of town but it does look like there’s income restrictions in order to be able to buy this house so how about our friends on the other side of the country California median household income in California is 78 672 dollars per household now California is a really large State and I know so not everywhere in California is expensive but what can that buy you and when we come into our calculator we plug in the median household income of 78 672 dollars assuming a 20 down payment of roughly 56 000 30-year loan term seven percent interest rate no monthly debts because we’re free and clear baby 198 dollars in monthly property taxes 150 a monthly homeowners insurance that brings us to a beautiful whopping payment of eighteen hundred and thirty five dollars a month or two hundred and eighty thousand dollars now what’s that going to get you let’s hop over to Redfin and find out so starting off with Southern California you can be in Long Beach California for two hundred and fifty thousand dollars for this one bedroom a one bath 610 square foot house just miles to the beach and at 250 000 it still puts you in the safe Mark after adding the 160 a month HOA fee now in Northern California if you’re good with being a bit further away from people in maintenance California you could be in this place for 260 000 four bedroom two bath Seventeen hundred square foot house with land and of course we got to take my home state of Colorado with our median income sitting at seventy five thousand two hundred thirty one dollars well what’s that gonna get you here property taxes here are fairly low in fact we’re the third lowest property taxes in the country when we go into our affordability calculator we plug in our annual income of seventy five thousand two hundred thirty one dollars fudging with the down payment thinking 55 000 good place to start to get to 20 maybe monthly property taxes 137 dollars a month monthly homeowners insurance 150 a month that’s all kicking out basically 275 000 of a purchase price well what’s that going to get you and where and I’ll tell you you’re not going to get much around the Denver metro area for that if you’re wanting to be closer to downtown you’ve got something like this one bedroom one bath 450 square foot condo and Cheeseman park for 200 000 and even after calculating in the monthly HOA fees it still falls under our monthly budget this is actually a really cool part of town so I wouldn’t brush this under the rug if you’re someone that’s young wanting to get into a place like this is a good option and if you’re good with being away from a lot of people and out of the big city you can head east to Deer Trail and pick up a property like this 265 000 for a three bedroom one bath 1200 square foot home and if the mountains are your jam for a hundred and eighty seven thousand dollars you’ll get this one bedroom half a bath home ohm 600 square feet nestled into the mountains I mean who needs a shower right right so how about some of the lower income earning States well let’s take a look at Arkansas it falls number 48 on the list here of median household income at 49 475 and this one might surprise you so plugging in that is the median income with 20 percent down seven percent interest rate all the Norms on everything property taxes we can afford a house up to 165 000 now that sounds a little ridiculous at first but then I looked and even within Little Rock which I believe is the biggest city in Arkansas there’s a lot of options I was actually quite surprised so we can look here on the West side of town now I don’t know how good these neighborhoods are I have no idea I don’t care for 165 000 pretty cheap in my books we can look at this three bedroom two bath two thousand square foot house in Little Rock Arkansas and it doesn’t look too bad to be honest with you and it even looks like if you go Northwest of Little Rock You Can Have beachfront property for 160 000 in the six bedroom two bath Thirty One hundred square foot home kind of unbelievable but there’s Arbitrage there folks you work from home you make 80 000 a year looks like you can make a pretty good life in Arkansas for yourself and let’s head over to the land of enchantment good old New Mexico where the median household income is fifty one thousand two hundred forty three dollars well going back to our calculator plugging in our median income figuring in property taxes 20 percent down homeowners insurance it kicks us out being able to afford a hundred seventy two thousand dollars in the great state of New Mexico well what’s that going to get us well if you want to be around Albuquerque it’s not going to get you a whole lot there were only a few options but there is something like this one it’s a fixer-upper for 155 000 it’s a two bedroom two bath 1800 square foot single family home so not too terrible there are a couple of options and then there are going to be a number of condos you can get into as well and if you’re good with being away from people a little bit you can get this single family home for 150 000 one bedroom one bath 930 square feet on quite a bit of land and if you are thinking of taking a jump into your first house you want to watch this video on the five biggest mistakes that I’ve seen first time home buyers and seasoned home buyers make on their home purchase