Purchasing primary residence in today's market.

[Dustin Poole]

Hi all, 

I've been waiting, and waiting, and waiting for a time I felt more comfortable buying and that times not coming. I listen to the bigger pockets podcast, and various other finance channels and I guess you could say I'm in a state of paralysis. 

The dilemma

The wife and I found a home we love, that is in the Weatherford TX area. 
The price on a per sq/ft number is relatively high for the area. 

The asking price is 495k and its newly listed. 

I make some where in the 200k range, however some of that (50k) ish is sign on bonus, and will expire at the end of this year. 

My wife is a stay at home mother, and does not generate an income. 

We have no other debt. 
 

My calculations put me over the "rule of thumb" for debt to income for a residence, but we have no other liabilities. 

I guess I'm just looking for advice, should I sit on my hands, or find a way to make it work. I'm also nervous about things appreciating. 

[Joel Allen]

Hi @Dustin Poole,

It sounds like you and your wife are taking the right steps to prepare to purchase a home (strong income, no debt).  Here's a quick look at how we'd calculate your debt-to-income.

Income:  $150K, which equates to about $12,500 per month

We'd likely need to exclude the $50K sign-on bonus from your income calculation since it will expire at the end of this year.

Monthly Mortgage Payment: $3,755 per month.  Breakdown of estimated monthly payment is below:

- Principal + Interest = $2,635 per month

- Property Tax = $870 per month

- Homeowner's Insurance = $250 per month

Keep in mind...there are a LOT of assumptions I made in this calculation. This is assuming a 20% down payment, which eliminates PMI. It assumes a 7% interest rate, a 720+ credit score, and I didn't factor in any HOA fees. So, we'd definitely need more info to really nail down the number.

Debt-to-Income Ratio (DTI) = $3,755 monthly debt / $12,500 monthly income = 30.0% DTI

This should put you in a very good position to qualify for a mortgage. Depending on the mortgage type, it's possible to be approved for a mortgage with a DTI in the high-40's (and sometimes even higher).

I'll send you a message...happy to help discuss your situation in a bit more details if you'd like.