whynot19734 t1_jadyitr wrote on February 28, 2023 at 7:16 PM

Reply to comment by iranisculpable in I can’t wrap my head around if I can actually afford to buy a home by [deleted]

DTI ratios are generally done using gross income because peoples’ deductions and taxes vary widely depending on their circumstances. Using gross income, his DTI is 26%.

OP, if you have kids requiring expensive childcare, this is not doable. Otherwise, it will be doable but a bit tight. I think the odds are that mortgage rates will come down in the next few years, though, so just be ready to jump on a refinance whenever it makes sense, and that will free up some more room in the budget.

iranisculpable t1_jae0vra wrote on February 28, 2023 at 7:31 PM

What a lender will accept and what is actually doable are two different things.

I once had a 70,000 household income in HCOL. That is $5800 gross per month.

I borrowed $216,000 at 9 percent. That is $1700 per month. Taxes $250 / month. Insurance $100 / month (earth quake insurance required in those days)

2050 / 5800 = 35 percent debt to gross income.

No kids. No other debt.

The banks and realtors convinced me I could afford this.

5 months into ownership I realize I was being lied to. My cash in the bank account was declining each month and I realized I had 4 months left.

I hustled a new job that brought household gross to $7900 / month.

2050 / 7900 = 26 percent.

After that I everything was better.