As a first-time homebuyer, you are are probably curious about how much you can afford before you even talk to a real estate agent or home loan professional.   As a general rule of thumb most people who have good credit and a steady income can afford to buy a home that cost 2 and one half to three percent of their annual income.

Most lenders can include other forms of steady income which may be in addition to your salary.  This would include such sources such as retirement, disability, child support, alimony or commissions and bonuses.   You will most likely be required to show a history of at least two years and the probability that the income will continue. 

Using my rule of thumb as an example, let’s assume that you have a combined annual income of $30,000 from your salaries and other steady income.  Your debts, such as car payment and credit cards, are less than 8% of your income and you have a good credit rating.  You would probably qualify for a home between $75,000 and $90,000.  There are numerous homes in St. Augustine in this price range including short sales and foreclosures.
 
Please keep in mind that the actual amount that you will pay for your home depends on the type of loan program, interest rates and your credit score.  Remember high debt will reduce the amount that you can borrow.  The higher your monthly debt payments, the smaller the amount you can borrow for your home.   With this in mind it might be in your best interest to pay these off before considering a home purchase.

Marjorie Taylor, Watson Realty Corp. is a licensed Real Estate Broker and community leader representing Homes in St. Augustine.   She holds the professional designations of CDPE, CRS, CSP, e-PRO, GRI, TRC and is passionate about helping clients buy and sell Homes in St. Augustine and Homes in St. Augustine Beach, Florida.
904-591-9121
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Marjorie@MarjorieTaylor.net
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