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So you’re thinking about buying a house hmm that’s very exciting but how much house can you actually afford and what should you put down for a down payment i’m going to share with you guys what i believe you can afford and what money you should put down i can’t wait to share this with you guys today good day subscribers thank you so much for joining me today i
Am jeremy this is the financial education channel and today we’re talking about how much house can you afford what payments can you afford how much should you put down for a down payment i’m going to give you guys all those answers today and i can’t wait to share this with you so first off you’re going to buy a house you need to in my opinion not get a mortgage
Payment that is more than one third of what your income is after taxes so maximum of one third of your income after taxes is very important after taxes i can go toward a mortgage i would prefer one fourth of your income before taxes goes toward a mortgage the reason being is you never want to strap yourself where you’re too much into going into that mortgage and
You are leaving yourself with not much to pay all the other bills because you’re still going to have health insurance you’re still going to have car payments you’re still going to have you know electricity water bills house expenses what happens when something goes wrong with that house home improvement stuff emergency expenses so many different factors you never
Want to strap your salt too heavily on okay you know even if you think old man i have enough set aside in my other bills are low enough right now that if half of my income goes toward the mortgage that’s okay in my opinion that’s not okay one third is the maximum 33 percent of your income is the most you want to put toward a more in my opinion you do not want to
Strap yourself you do not want to strap yourself now how much for a down payment should you put i am going to go against conventional wisdom conventional wisdom will tell you you need to put as much as you can toward that down payment and try to get your mortgage payments as low as possible no no no no absolutely not horrible idea in my opinion horrible idea
Maybe that was okay at one point in time that’s no longer okay imagine and you might be one of those people watching this video or your parents might have been one of these people one of the people that bought a house in 2004 2005 2006 or 2007 when home prices were way up there they put a ton of money down on their home 20% 25% 30% because that’s what they were
Told was good and then what happened housing prices went they took a big dump and then what happened all those houses were underwater at that point they were all worth far far far less than what those people paid for which meant all the money they put toward that downpayment is wasted completely wasted because they can’t even get back what they bought the house
For if they paid three hundred thousand for that house and it’s worth 150 thousand do you think their down payment went toward anything no it went toward absolutely nothing it was completely wasted so in my opinion as far as putting money down toward a house put as little as possible if you can try to use fha you know those first-time homebuyer type things if you
Have a low income a lot of states have low income take programs where you only have to put 1% 2% maybe 3% down if anything down and if you don’t even if you aren’t in those income brackets and say you’re making a hundred thousand a year or fifty thousand or two hundred thousand however much you’re doing really good still put as little money down as you possibly
Can because you don’t want to end up in a situation like so many people ended up that just got wiped out you can always put that money to the house later on down the road if you want if that house holds its value for the next 5-10 years you can always put that extra 20,000 extra 50,000 toward the house payment and get that mortgage way down you can do that at that
Point there’s no rush to do it break that in there because if the house loses a massive amount of value 20 30 40 percent your down payment just it erode it it became nothing at that point so that’s why i go against conventional wisdom on that so let’s wrap this up no more than a third of your income after taxes goes toward a mortgage payment and if you’re a renter
Keep that in mind if you’re renting same type of philosophy no more than one third of your income after taxes should go toward that one for 25 percent that’s really the good zone in my opinion number two put as little as possible toward a down payment you can always put more money later on down the road if you want you can always do that later on that on the road
But don’t do it right from the start don’t do it in my opinion so anyways if that covers that subject today guys i hope this helped immensely in i hope everything works out buying a house is a very exciting thing so i thank you so much for watching guys if you haven’t subscribed you may want to i talk a ton about personal finance this videos personal finance i
Talk about investments i talk about stock market i talk about entrepreneurship on a young business owner i give a lot of tips to other entrepreneurs and business owners and i do a lot of videos like that thank you so much for watching guys have a great day
Transcribed from video
How much house can I afford? – Buying a House! By Financial Education