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How much house can I afford?
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How much house can I afford?


I am 25 years old, college grad, I make about 42-44k a year in a state gig and it is not likely to change much in the next 2-3 years. Past that there is a good chance of a federal job which will pay much better, but almost definitely require moving. My debt is extremely low, pretty much nonexistent (month to month expenses). I currently live at home as I have been saving since I got out of college to buy a house. I have about $45k in easily accessible savings now so I could make a heavy down payment (I am socking much away in retirement funds but my job is pensioned and very stable) but I don't really know if it is advisable to dump that much into a down payment with rates this low.

I want to buy this house to live in for a while but perhaps later to rent, as I anticipate having to move to follow my career path. There is a property contiguous to family land and some land that I inherited that I am very interested in. I think it will sell for about $110-115k when/if it goes on the market.

The home I am looking at is very attractive to me in layout, proximity to other properties I own, and has significant sentimental value (I was very close as a young child to the couple that lives there, and their family) but the owners are an elderly couple, and one is likely to pass away soon and it is probable the wife will not be able to live on her own due to health difficulties. I guess those are extraneous details, but just gives you an idea that I personally want "THIS" house.

I would like to hear your thoughts on owning a home in the present market, viability of looking at a home as an investment (I know there are differing thoughts, but I plan to rent it out if/when I move for work later, and it is in very good condition presently so I think it would be an attractive rental home if I did that), and the advisability of purchasing a home at my age. Homeowning may be dumb for me, share your opinions on the matter.
Talk to lenders and realtors. There are a lot of fees on top of the normal 20% down payment, but there is a lot you can do. If you're a first time buyer you may be able to get a conventional mortgage for 3% down. You could get an FHA for 3.5% down. You could put in your offer 'seller to pay buyers closing costs up to 6%', and optionally offer 6% over list price. You could have a cosigner to increase your price range and rent rooms out. You could buy a duplex or triplex. You could buy a shithole, fix it up with 0% credit cards and cash out refinance.

Usually start by picking a property and getting pre-approval through a lender. There isn't one specific way to do these deals, it takes networking, research and some forward thinking. Look for a mentor or investment groups in your area. Get someone experienced to walk you through.

I'm 28 and buying a cheap house in philadlephia on a 203k loan now. I have no debt, about 25k liquid, and 70k salary. It worked out to be much cheaper than renting even if I screw the deal up and can't find renters.

Thank you for the input. It seems to me that over the course of just a few years, it is cheaper than renting.

Home prices and COL are very low here in general, but I will admit the idea of such a long term loan at this point in my life, while not scary, makes me cautious.

I am personally thankful that my parents insisted that I live at home out of college. I feel like having this much money on hand is a great asset, and I am in a pretty good financial position. But the assumption of a significant amount of debt when I have never had any before (my college was paid for through scholarships, so I never had student loans) is something that gives me pause, and I worry that the costs of home ownership may end up being much more than I am assuming.
A 30 year contract for hundreds of thousands of dollars is a little troubling at first. Not too many people enter with the thought of being profitable. Are you adding value to the house? Can you rent it out for more than the payments? Is it appreciating?

You will most likely not pay off the mortgage and ever own it outright, but rather make money by saving on buying vs renting, renting to tenants, or selling for a higher price.

Profitability is not the first consideration, as I would like to live in it for at least a while. I am mostly concerned about the finances, hidden costs, etc. Things like mowing the lawn an d landscaping aren't a concern, I have plenty of migrant workers who work for my family farm that can do that either as an additional duty or for a very reasonable price (I know that sounds sort of flippant, but their duties already include taking care of other rental properties my family owns). Depending on where my job takes me, however, I can see it being a good rental, and if I end up settling down elsewhere, I can always offload it down the road.

I personally have no reason to add on to it or improve it at present, as it is well maintained and has the features I find desirable. I might finish the basement one day I guess, but I have plenty of legitimate uses for an unfinished basement, so it's not a priority.

The area is appreciating, but not significantly. This is a nicer part of a rural area of the county.
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