Friday, June 7, 2013

With a 40,000/ year income how possible is it to afford a $400,000 home in 5 years?

With a 40,000/ year income how possible is it to afford a $400,000 home in 5 years?
I am going into the workforce, and want to make sure that I can afford a home in a couple of years...but I would love a dream home in san juan capistrano...is that possible with 40,000$ / annual income?? Also, how much should I start saving for a home....I'm knee deep in college debt, but I would love to invest in real estate instead of renting and wasting the money.
Personal Finance - 9 Answers
Random Answers, Critics, Comments, Opinions :
1 :
Put it all on red!
2 :
The general rule is 3 times your annual household income. 400K may be a bit much.
3 :
With only makin 40k a year a 400k home is a bit out of your league unless you have NO other bills. My husband makes more then 40k a year and can't afford a 400k home. I think you should start saving for a home and then start looking at less costly homes. Thats just my opinion based on you saying you already have debts. To know what you can afford go to a bank or morgage broker and have them run the numbers to see what you can afford.
4 :
Math is simple. If you save 25 % of 40,000 /year, you have 10,000 saved, per year. In five years, that is 50,000,, more than the 10 % down payment needed, for a 400,000 pruchase. You must also consider building up credit, so you can qualify to buy a home, and be prepared for up keep, utilites, etc. A 400,000 dollar home will have a payment of right at $ 4,000 a month. I am glad you see the wisdom of not throwing away money on rent. Also,,if you buy a house,, have job security. If you lose the job, and fail to make payments,,you also lose the house, and all you have invested into it. it is best to always have money set aside, in case of losing a job,, breaking a leg, etc. There are some kinds of disability insurance, I very highly recomend you consider. It is cheap, and if you get disabled, you still get paid. You might also consider having a room mate or two, ( carefully considered), to help with the costs, and the work around the house. ( introduce me to the cutest one!)
5 :
After tax you'll see less than $28,000 a year... I suggest you get a morgage.
6 :
I think $400K is a little out of your reach based on an annual income of $40K not to mention you've got to repay your college debt. I suggest you work towards cleaning up the college debt before deciding on buying a house.
7 :
You are not being sensible. In order to live like that you need a better job or more than one. Your house payment alone will be $2,000 a month with very good credit and lets face it if you are right out of college, you will not have any credit. Your house payment alone will cost you at least $24,000 a year, plus you will have college loan payments, car payment and car insurance, electric bills, cable and internet, food, and don't forget that out what little money you will make a month health insurance will be taken out of it.
8 :
If you want to be financially independent you need to never buy a home that is worth more than two years of your income. UNLESS of course you enjoy living paycheck to paycheck and sometimes wondering how the next bill will get paid since the last emergency took most of the money you had saved up. If you save all the $40K's for the next five years you will only have $2oo,ooo.oo If you put all this $2oo.ooo towards the home will you still be able to afford the payments on the remaining $2oo,ooo ??? Don't forget about upkeep, insurance, taxes, hidden fees & emergencies that all arrise with home ownership. Buying some real estate (multi family dwelling) so the renters basically PAY for it is a great idea, especially if you can live in one of the units. Do the math and NEVER buy a home that is big just because.... Make sure you have the size home YOU can handle in all aspects of ownership. Good Luck !! : )


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