How Much House Can I Afford with 60k Salary? - YouTube

Have you ever wondered how much house  you could buy with a $60,000 year salary  

in today's day and age? In this video I'm  going to show you that, and much more.  

Hey everybody, welcome to my channel. I am  your host Leo Landaverde, Business Coach,  

and Real Estate Investor, helping  you scale your business.  

If you're ready to grow your business to  seven figures and beyond while creating  

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A couple of weeks ago I did a video on how  much house you could afford on a $50,000 a  

year salary. Well, I got some great feedback from  you guys, and thank you so much for the comments.  

I responded to all of them within 24 hours, and  you got me thinking about doing anything video,  

this time for $60,000 a year salary. How much  house can you buy on a $60,000 a year salary?  

I'll get to that in a minute, but here is the  trend that I've noticed. People go to Zillow,  

and people go to Trulia and other websites  and they look for homes and they find a home  

and they two, is they fall in love with the house,  and number three they're trying to figure out how  

they're going to afford it. Well the process is  a little backwards because you should actually  

know how much house you can afford before you  go shopping, right? So you not just understand  

what falls in your budget. Here are the three steps to calculating how much  

house you could buy on a $60,000 a year salary.  Step number one; we're going to calculate your  

debt to income ratio. Here is the formula; we're  going to take your monthly income, your gross  

monthly income, and we're going to multiply by the  maximum allowable debt to income ratio from the  

lender. And then we're going to subtract the debt  load, all the minimum monthly payments that you're  

making, coming from your credit report. And that's  going to give us your debt to income ratio.  

Number two; we're going to calculate your maximum  monthly payment based on your monthly income.  

And number three; we're going to determine your  maximum purchase price, and for that we're going  

to hop over to Zillow to do that. But before we  get to Zillow, let's hop over to my computer,  

so I can show you in this great spreadsheet  how it all comes together. Let's go.  

All right, here's the fun part. Calculating the  numbers, are you ready? All right, we're going  

to put it all into practice. There's a couple  things for you to remember as we move through  

this worksheet. The yellow portions are input  sections, this spreadsheet is not locked. I'd be  

happy to give it to you if you want it. But it can  be locked so you can make your own calculations.  

The three things that we have here, actually four  things, three that we're going to be looking at,  

it's the maximum debt to income ratio. I did  a video last week on VA loans where the max  

debt to income ratio, also known as the backend  ratio was supposed to be 41%. Compared to lenders,  

are a little more flex in that. It can go  up to 50%, even FHA loans can go up to 55%.  

We just want to keep it at 45% backend ratio. And now if you notice in my comments,  

[inaudible 00:03:21] it can depend on the type  of loan as it is. Because this loan is about  

how much house you can afford on a $60,000  a year salary, this is what we have here,  

this is the suggested debt to income ratio. I  suggest anybody who calls me and says, "Hey, Leo,  

how much house can I afford?" I want to make  sure that you get a loan that you can afford,  

right? Regardless of what the lender does.  Regardless of whatever their max ratio is,  

you should be prudent, and you should plan to  have as small of a backend ratio as you can.  

And this is, for those who are salary,  even though the calculations on $60,000,  

as you can see in the formula here, is $5,000 a  month gross, usually what you take home, depending  

on whether you're single or married, could be  anywhere from... you'll take a haircut on anywhere  

from 20% to 30% of your gross. I have here 75%  and that usually comes to... we did calculations  

on the blue section, which we're not going to  go over today. It will make a longer video.  

All right, so here's the yellow portion. The red  is your monthly payments coming straight from your  

credit report. A lender is going to want to  pull your credit report with your consent, and  

they're going to look at all of your historical  information, all of the loans that you paid,  

any collection issues, liens, tax liens, anything  can show up in your credit report. We're going  

to pretend that you only have three things  showing on your credit report that have  

balances. One is going to be a car payment for  $325, which is pretty much middle of the road  

car payment nowadays. And you're going to have  one credit card for $70 minimum monthly payment,  

and a second credit card, you're making a minimum  monthly payment of $100, which gives us a $495  

a month debt. That does not include food, or  movie, or insurances or anything like that.  

It just strictly talks about payment. All this factors into the calculations.  

So what is the calculation? We're  going to take your monthly gross,  

and we're going to multiply it by your maximum  debt to income ratio. We're going to subtract  

your minimum monthly payments, and it's going  to give us the maximum mortgage payment, PITI,  

principal, interest, taxes, and insurances that  you can afford. That number comes up to $1,755.  

Now even though this is not a requirement of a  conventional loan, it is for other types of loans,  

and you also have to keep in mind how much is left  after you pay your mortgage and all your minimum  

payments. You still have to live. You still have  to buy gas, buy insurance, eat, buy clothes.  

I think a lot of people get into  trouble because they just figure, "Hey,  

I can afford it," they don't worry about they have  to eat throughout the month. Keep that in mind.  

Now I will make other videos when I go over  different amounts, but for this one at $60,000,  

that means that we're ready to go shopping  because we know that we can afford a $1,755  

a month payment. Now let's head over to Trulia,  where I'm going to show how that all works.  

All right, all right, now I think  we're ready to do some house shopping.  

You ready? All right, let's do this. Again,  what was the amount? Maximum mortgage payment  

that we can afford on $60,000 a year? According  to our calculations, it said $1,755. All right,  

keep that number in mind, $1,755. Again, I'm  in California, let's find that. Let's say,  

let's start with just kind of moving around here.  We are at $1,185, we're at now $1,250, $1,755.  

Puts us at $300,000 home. That's not too shabby  and this is with a zero down payment at the  

current low rate of 2.49. Today's best rate,  30 year fixed. Well, that's pretty good. Okay,  

keep in mind that this is combined annual salary,  this is just a single person buying a home.  

Now if you're in L.A. that's not  going to get you nothing but dirt,  

just the lot, no house. If you're in the Bay  Area, you're probably not going to get much  

either. But we're in the Central Valley, so we  can definitely do get up... I tell you, that's  

a plug for the Central Valley, California. Okay, now let's say you have a down payment.  

Say you had $20,000, let's even go say you had  $25,000 saved up, or 8% on a $300,000 home. Now  

notice that our down payment went down because  there's a lesser amount to finance. Now we're now  

financing $275, instead of $300,000, which allows  us to in turn buy a little more house. Now am I  

encouraging you to get the biggest house that you  can get? No, but we're seeing what it will do.  

Now we can go probably at around $330,000. You  can get a decent home in a nice part of town,  

in the Central Valley, or Fresno, Clovis area, or  really anywhere in the Central Valley, for that.  

And that's kind of where we are. Now we know that  if you're pre-qualify and say you're FICO is $670  

and you have $25,000 down, and you have a decent  job, and you can prove your income for the last  

couple of years, I don't see why you wouldn't be  qualified, and you could start shopping today.  

All right, hope this video helps you. Thank you so  

much for letting me share. Stay tuned for  more videos coming up every Thursday.  

Are you currently in the market for a new home?  Interest rates are at historic lows. This is the  

time to buy. If you're interested, go ahead and  shoot me an email. I'd be happy to talk to you.  

My email address will be at the  description of this video down below.  

Also, if you want to join a community  of like-minded, successful entrepreneurs  

just like you, then join our Facebook group.  The link is below. I share tips, tactics,  

and strategies on a weekly basis of how my clients  are growing their business. 7 Figures & Beyond.