How Much House Can You AFFORD on $50k a Year?

so it looks like houses like this pop up which quite frankly I don't think this could even get financed yeah this is not even I don't think you can even live in it so you or your partner may be at the point where you're approximately making about fifty thousand dollars annually this is a huge accomplishment and you should be proud of yourself but right now in today's society with housing being so expensive is it enough to actually afford or rent a decent place well in today's video we're going to break down the numbers and see what kind of a monthly payment can you afford to pay for either rent or home ownership to see if it's even feasible to buy and of course we're going to look at some areas specifically around my area to see what what kind of house we will be able to rent or buy or maybe what kind of a cop condo or apartment whatever we could find to see what it would be our living situations with this kind of income now this number is important to me not just because fifty thousand dollars is around the range of what a lot of online articles say the average income is for most folks and obviously we have people with the higher degrees make a little more some college no degree you're making about 47 if you have an associate's degree making about 52 so 50 000 is that range but more importantly why this number is important to me is because I grew up in not the best part of town here in Phoenix I was raised by my mom I was just me and her uh we were in a one bedroom apartment and things were tough I remember some of my favorite meals that I mean I I'd look at this not with shame but with pride she would go and get me a dollar bag of like frozen fries um she would buy like the like a cheap little like steak just like a one of those like little you know those those three or four dollar steaks you buy at Walmart um and then she would Grill this on on the on the pan she would Grill the the piece of meat like obviously cook the fries and then give me a flour tortilla and that would be something like my meal growing up is I would get that I would make like a burrito with the fries and the meat and you know look at me stop talking about it now it's kind of silly but those are the kind of meals that she would have to improvise just to get by and I'll never forget when she would tell me Javi her hobby she used to call me Javi as long as you make a thousand dollars every week I think you've made it we would talk about like what I want to do with my life or what would I want to do after high school and that always stuck with me that was an obtainable goal that I wanted to get but B it just kind of showed me where her like limits were and what her threshold or her glass ceiling was and I always remember that fondly and funny enough if you get a thousand dollars and you multiply it by 52 which would be 52 weeks in a year it's approximately about fifty two thousand dollars so in honor of my mom in honor of all of you guys here today let's figure out what kind of house what kind of place you'd be able to afford and what Solutions we have right so for first and foremost let's break down budget so let's start off with fifty thousand if you get paid fifty thousand dollars annually there's approximately 13 checks that you're gonna get every in that year the reason why is because there's approximately 26 paychecks if you get paid bi-weekly which most folks are so what we're going to do is we're going to get 50 000 and we're going to divide it by 13 to get an idea of our a monthly income and that monthly income ends up being about 3 846 dollars so we're gonna put about thirty nine hundred dollars just to give us a a like a a nice round number so now what can we afford with this monthly income well first and foremost as you guys know if you are approximately making thirty nine hundred dollars gross that doesn't mean you're going to actually take home 3 900 a lot of takes you're only bringing home about 75 to 80 percent of this check so if we get thirty nine hundred dollars and we take out twenty percent of that we're left with about Thirty One hundred dollars around Thirty One twenty to be exact so really when we're looking at budgeting we shouldn't be using our gross income because our gross income is it's our it's it's great to show people but it's not what's actually being brought to the table what's being brought to the table is thirty one hundred dollars so how much of this can we actually allocate towards your actual payment well there's a lot of schools of thought um and but in this video we're going to specifically preach the ones based off your net income because if you're basing it off your gross income you're living in la la land because it is my personal belief and I believe everyone should inherit this you should base your budget off what you're actually bringing home not what you're being told on paper you're making so there's several schools of thoughts here where 3120 if you're a little more conservative um a lot of the conservative Finance folks preach this you would be considered house poor if your payment your rent or your mortgage payment exceeds over 25 percent of this so in this case 3120 your payment could not exceed 780 you might you might be scoffing because that's pretty insane especially nowadays but that's the general just so instead what I like to tell folks is and this is what I've lived by my entire life you don't have to go through it you can adjust it maybe you want to adjust a few points off whatever you want to do I've always left saying hey as long as my monthly payment is a third of my income I can probably manage the rest of my bills with the second third and I can save the third third right so that's just how I lived you can take that you can adjust it however you want but a third of 3120 would be approximately a thousand twenty nine with 60 cents so 60 cents are very important let's not forget about them so basically one thousand twenty nine dollars or let's just say 10 30 uh thousand thirty dollars is going to be what your monthly payment should not exceed so that way you can afford where you live this leaves you approximately with two thousand ninety dollars to pay the rest of your bills is it doable well I mean I'll be honest it's pretty tough let's say on average utilities you know you're paying I don't know we'll do some quick math here you're paying uh water bills like a hundred dollars let's say your power bill is like 200 you're paying a hundred dollars for your cell phone bill uh maybe another hundred dollars for internet and let's say you're spending about 300 of groceries you're left with about a thousand two hundred and ninety dollars now once again these are just off the top of my head you could be either scoffing or agreeing with the numbers I'm saying please please feel free to adjust we're just here to get an idea that leaves us about 1290 to either save or to live your life comfortably can you pay your debts with this can you pay your car payment can you pay your Starbucks runs your your auto you know pocket runs can you save money with this well it's a little on the tight end right but technically it is doable very difficult but doable but either way your monthly payments should not exceed a thousand Thirty to live comfortably so obviously the general question of the video is what can you afford with a 50 000 annual income so what we're going to use for as an example is we're going to use my local area of Phoenix Arizona it's a pretty popular area and it's pretty expensive it's gotten really expensive for the last three years so it may vary from yours but I wanted to show you what I'm going to do here locally so that way you can apply it to your situation for the mortgage aspect it's going to be a little more complicated what we're going to do is we're going to find a house and we're going to reverse engineer what that monthly payment would look like for that house and see if that monthly payment works and if it doesn't then we're going to kind of adjust the price until we find something that works we're actually going to use the MLS I am a licensed real estate agent so I do have access to it but you can use any main website to get this information so we have currently 6 700 rentals in the market um and active in coming soon so let's see just in general what is under 1100 okay we have 69 options I promise you that was not intentional but that's amazing 69 options so approximately six of them are single family detached homes but as you notice they all disappeared here in the central Phoenix area there's one in Glendale but where did all the other houses go seriously where do they go I don't see them let's look in the list and see if we can find them um Douglas Arizona Globe Sierra Vista I believe that's going to be more yeah that's it's not even in Phoenix anymore we're south of Tucson Douglas we're literally on the border of Mexico globe or Tucson Sierra Vista Tucson yeah so essentially you you could rent a place under 1100 in Phoenix as long as you're not in Phoenix as long as you're almost in Mexico then you can get a place so there is one place in Glendale though that is a small home so essentially this means it's a one bedroom one bath it's a remodeled Studio which if we look at the photos not too bad looks like a little small studio um but it doesn't even look like it's part of the main house it looks like it's like this is the main house and the Studio's back here so I don't even know if they're allowed to do that so I might even report them but I know snitch that's right didn't I just say I was raised not not the best part of town and one thing I learned is not to be a snitch anyway so it seems like single-family properties are not doable so if I want to live within my means without my budget with a 50 000 income in Phoenix Arizona it's not doable for a house for a rental at least so I'd have to rent a condo or townhouse so let's see how that works so we do have plenty of options for a condo and townhouse 750 dollars one bedroom one bath we're looking specifically in Phoenix we're not going to Sierra Vista or anything like that uh zero bedroom one bath how does that even work hire you zero bedrooms oh because there's no bedroom it's just a studio so you would have to live in a studio kind of house or apartment set up one this one at least has one bedroom but I'm pretty sure they probably just labeled it wrong okay yeah this one does have no it doesn't have a bedroom and actually it's not even the actual house it's the back of the house so it seems like if you want to be under a thousand dollars you're not even getting a house or getting a studio you're getting the the storage shed of somebody or you get an apartment a small apartment here in the central Phoenix area Downtown Phoenix area um like this place looks pretty cute 10.95 and it works um let's see what the area I mean yeah you're in Roosevelt which I know this is like a downtown area but um to kind of give you guys an idea of crime rate uh what we can do is find a crime map here in the the City of Phoenix PD all right so that's pretty self-explanatory so we're looking um let's look at a comparison of the houses that are for rent under 1100 um we see this is the central Phoenix central uh Midtown Phoenix area um some we get some spots here throughout uh here we see that the majority of the crimes are happening in the Midtown Central Phoenix so essentially you would be putting yourself in a situation where there'd be higher crime rate here's the thing there's crime everywhere that happens I'm not going to be dumb and just say oh it's bad but at least live you just have to be aware you have to be familiar with their surroundings and you just you have to be more perceptive of what you're doing what you're leaving out what you're locking so you're going to definitely bring a little more anxiety to your life living in these areas so is it possible yes but these are the kind of places you would be renting a either studio in the back of a house or going to do an apartment or some kind of small condo or townhouse in it in a very urban area of the major city now once again we're talking specifically City Phoenix you can go look in your area look under eleven hundred dollars and anything that satisfies that will will be basically doable now when it comes to actually looking where you can afford housewise this one's a little different first and foremost let's determine what you can actually qualify for if you are looking to buy so if you are making the 30 I think we said 3 900 okay so you have to make sure you know the difference between what you qualify for and what you can actually afford so what a mortgage officer will do to figure out what you qualify for is use your monthly gross income not what you're bringing home while you're on paper making a month thirty nine hundred dollars is what we what we found it is and they're gonna get 50 of that so like depending on the type of loan some are 45 but most of the time 50 is the max they can go so in this case 3 900 multiplied by you know 50 or get half of it and that gets 19.50 so that's going to be what you qualify for now here's the thing from here they're going to subtract any minimum monthly payments you have so if you have two credit card payments and let's say they're like I don't know 800 balance each well what they're going to do is they're going to look at the minimum payment on your statement so if your minimum payment's like thirty dollars twenty five dollars they both are thirty dollars let's say um then they're only going to take out sixty dollars from 1950. they're not going to put what you usually pay they're not going to get a percentage of what the debts are um they're gonna get what your minimum payment is which can be very dangerous because you can have multiple credit cards at high balances but your minimum payments might be just a tiny like forty dollar payment and you could potentially get yourself in a situation where you're buying a place and you have this all this massive debt you still have right but anyways 9 1850 so let's say you have two credit card stats thirty dollars each let's say you have a car payment for you know 300 so we subtract 360 from it so that means you would qualify for about 15.90 now if you don't have any debt then they would qualify you for 19.50 so let's just get that range there you should afford eleven hundred dollars if you have let's say about four hundred dollars a minimum payment debt you're gonna qualify about 15.90 or if you have no debt you're going to qualify for 1950. let's have that range in mind as we start doing some research so in this example I'm going to actually use Zillow because a lot of people use Zillow and that's just what we're gonna do so Javier okay I want to live in Chandler Gilbert okay great man let's let's see if we can find something relatively cheap let's go under I don't know 400 000. not too many options but hey we found something I don't know maybe not Chandler let's do like over here okay found this one in Phoenix 393. let's just get an idea of what the monthly payment will look like we could use Zillow and say okay it's only 400 but let's learn how to do this on our own so there's a lot of free mortgage calculators online there's a lot of content creators that have mortgage calculators like myself we don't need to do all that we could literally just use the ones that are here provided we don't need to break like if you're looking to break down the amortization and the rates and all that these these calculators are great like the one I have is amazing at that you can break down what you're paying in interest over 30 years compare mortgages that's great but for now we're just gave me a good solid idea of what that looks like so we're not doing 20 down let's say we're doing five percent down let's say we're interest rate are 6.5 which is a little on a nicer end mortgage insurance is on the higher side I don't think it would be 236 unless you're going FHA so let's just leave it high for for that for for now let's look at the tax rate they're giving us uh 800 800 1800 is what they're calculating here but if you look here it does tell us it's 21.70 so uh I don't know I feel like uh let's just adjust that slightly so we can get to that 2000 Range so it'll be like 1.54 yeah around there 2100 home insurance little on the higher end I think it'll be closer to 1300 a year HOA fees are 150 bucks so that gives us a monthly payment about three thousand dollars so off the bat I can tell you hey man four hundred thousand what are you doing so then you're like okay crap let's look under 300 000 to see if that's doable you're not looking there anymore so now we're like okay where can I look uh all right well there's Mary's here for 300 000. uh let's do that scroll down scroll down taxes are 15 12. we're gonna get an idea of that um let's do in five percent down mortgage insurance 180 once again that feels too high but we'll leave it taxes are what was it did I say it was 1512 they're calculating a 1410 here so let's just adjust it so we can be closer to 1500 okay 51 is about there home insurance that's about right HOA is 48 okay great what does that monthly payment look like twenty two hundred dollars so we're getting up there so maybe with a PMI not so high maybe it works but still that's 299. it doesn't look like it's feasible we're getting closer to that if we go back to that range where we had it we're more to the higher end of what we would qualify for if we had no debt so really we need to be like under 299 so we need to probably go like under like around maybe the 250 range I'm assuming so let's see what pops up under 250. Sun City we're avoiding because we're not retirement it's a retirement community and that's it this is what you're looking at single-family properties we get one house in South Phoenix a lot of new builds but the new builds a problem is they start them at zero dollars plus so it's like I don't know why they do that that's why they're popping up here so we have some houses in older older parts of town that might work so it looks like houses like this pop up which quite frankly I don't think this could even get financed yeah this is not even I don't think you can even live in it but that's 225. here's another one for 185. and that I can see some like some water damage there that's not good it's completely boarded up like this one seems like it's habitable 215 I don't think it's a single family though it's a patio home we look at the monthly payment play around with that for a bit the taxes are 468 which are cheaper so uh make sure that goes down to like what probably about 0.3 35 I'm assuming lasts even less bring this down to five percent now we're closer we're still not in the payment where we where we should be to afford but we're in that range closer of what you would qualify for where you shouldn't be once again because you would be over leveraged but that's at 2 15. so this is the type of house you would be able to buy it won't even be a single family so you would be priced out of all single-family properties you would not be able to buy an actual house you would have to look at condos and townhouses but the problem with those are they may look cheaper like we can get something for 210 but the HOA is like 200 a month and that kind of eats up into our monthly cost so if we get this townhouse for a three bedroom one bath uh let's say we do five percent down interest rate would not be six points it would be 6.5 mortgage insurance 126 property taxes are 380. they're calculating 987 so that's way low let's do like 25 yeah it's closer to 15 percent home insurance is actually on the cheaper side and the reason is is because these townhouses and these condos the HOAs cover like the roof and the cover stuff like that so they that you have to have less of a policy because some stuff is covered by the Association um of course and with the HOAs you're like it would if without the HOA it would work you'd be like at 1400 1300 but you're still there but point is you would have to over leverage yourself to buy a small not great place you would have to get something like 150 range uh this is technically an apartment the HOA would be 340 but with the less price it would work but either way it doesn't seem like it works we're looking at houses that need to be rehabbed we're looking at places and areas and maybe you're not comfortable with so what options do you have if you live in a in a major city like this well quite frankly you don't have options um you can maybe try to buy a new build with a lower interest rate but the reality is if you're a single person making at least 50 000 which was the goal for my own mother it completely removes your ability to buy a home in major cities like Phoenix so what you're forced to do is you're forced to move you're forced to go to different areas different cities that maybe you're not too comfortable with or it's forcing yourself to to Really stretch your budget you're buying with like 1800 1900 monthly payment um and you're super stretched out and you're putting yourself in a bad spot where hey you own a house congratulations but if something goes wrong a month you'd lose your job or you have some kind of emergency you're setting yourself up for failure because you over leverage yourself with that monthly payment so what needs to change we need more affordable housing it's a really shitty situation for most folks I mean you think about it even my own mother thought a thousand dollars a week is definitely doable but it's just unfortunate reality in our in our society is that housing is become something much more expensive too expensive if you will but at the end of the day here's the thing these investors who are being consulted by the same people who are scaring you to buy uh to not buy because the housing market can crash they're buying houses and guess where they're buying they're buying these first-time home buyer homes they're buying these starter homes so do not let this discourage you my people what you want to do is let this encourage you because the more time we wait the more investors will buy up these properties and the more chances you are you're going to be renting do what you need to do get yourself out of debt yeah maybe you might have to like get married first that sucks I get it I know it's tough but it's just the reality we're in maybe you have to move into a different area self and seek different employment whatever the case may be owning a home is no longer a solid investment but it is something you should strive for because it is a there's nothing quite like having a piece of property in the United States or America that belongs to you and you only and is not only rented by you for a year and owned by really by some Corporation right so do what you can to get out of it let's not let this demotivate us it's going to be a lot more difficult Journey but it's still possible to buy what do you guys think I'm curious to see what you guys found out in your specific area so do you mind uh just piping in a comment what you what kind of place you can rent what place you can afford with numbers that we use today in your specific area so we can get a good idea for people um and then of course you know if you want to support the channel like subscribe I make more videos just like this to help you guys out um so appreciate you guys thank you so much make it a blessed day and never forget to eat your fries and steak and with tortilla burrito today I know so bad take care

Channel: Javier Vidana

Views: 179,257

Keywords: how much home can you afford, mortgage, mortgage rules, renting rules, home buying, buying a house, renting a home, 30 30 3 rule, affordability housing, housing affordability rule, calculate housing affordability, $uicideboy$ 504, annual salary, 50k, $50000

Id: M7I88JNc22k

Length: 22min 44sec (1364 seconds)

Published: Tue Jul 04 2023