In many parts of the state, trying to buy a home may seem like an unaffordable and unrealistic dream. This may be especially true if you do not make much. How can you expect to afford a $500,000 home if you only make $50,000 per year? Well, if you buy the right home with the right financing, your dream just may be possible. In some cases, it may even be better to buy a home and make mortgage payments. Why waste the money you earn on rent: That never builds your wealth! This week, Nickle City Funding is here to help Orchard Park, NY residents understand how much home they can afford making $50,000 per year.
Products that Help Make Buying a Home Affordable
$50,000 per year is actually close to the average American income in many parts of the country. The government has made programs available to help lower and middle-income families buy a home. For example, the FHA Loan program offers mortgages with low down payment requirements and manageable interest rates. If you qualify as a Veteran, service member, or surviving spouse, you can also apply for a VA Loan and get your down payment requirement waived entirely.
Lenders will scrutinize your credit score and debt-to-income ratio before approving a home mortgage. Many indicate that debt-to-income must be at or below 41%. For instance, if you make $50,000 per year, but also have a sizeable student loan and car loan, you may be getting close to this ratio. You may be able to get a $200,000 home with an affordable payment plan. However, you also have to factor in the cost of taxes and mortgage insurance, if it is required. Further, your home will require repairs and upkeep. Be sure you have plenty saved. Work on your credit score and lowering your debts before you go to apply for the home.
Other Strategies to Help Maximize the Home-Buying Budget
There are many strategies to help you maximize your home-buying budget. Some people take out a second mortgage to avoid paying private mortgage insurance. Others will ask their relatives for gifts to apply towards the down payment on the home and get better financing terms. Some people choose to get an 80-15-5 mortgage. This means 80% of the home cost comes in the first mortgage, 15% in the second, and 5% is paid towards the down payment of the home. You can also do your research and aim to buy a home in an area you can afford.
Nickel City Funding Inc. in Orchard Park, NY is standing by to help you understand how much home you can afford. We welcome you to contact our friendly staff today!