So how do you save it for a house, How much house can you buy and how do you make sure you get approved.

1. Common Down Payment you Here
– 0% money down
– 3.5% FHA Loan
– 20% down payment

Here are the Cons and Pros to each of these
– 0% down payment is very unlikely of actually finding a lender because they want you to have skin in the game. But if you do find out it’s going to be very high mortgage payments, because you’re borrowing 100% of the money
– 3.5% FHA ( federal, housing, authority) Loan: you do get to put down a very small amount of money, you don’t need the best credit score it can be 580. And you can get one for a multi-family unit of up to 4 units. But there will be mortgage insurance premiums, a large monthly payment ( you could be looking at somewhere around 2% just in those fees of the entire loan annually)
– 20% down payment you and can avoid PMI because you’re putting down so much equity, you also get a lower monthly payment. But the big con is that its going to a lot of money to actually save up depending on the house you’ll be buying.

PMI Calculator: https://www.hsh.com/calc-pmi.html
PMI: can be affected, by the down payment, loan term, and also your credit score. It ranges from .20% all the way up to 1.5%

2. Qualify Debt to Income Ratio
– This is going to tell you if you can actually qualify for the house you want
– This way before you go and try to ding your credit, you can use the same formula the bank uses to determine how much house you actually afford
– Ps, remember although the bank might give you a big loan, we always want to make sure the mortgage doesn’t go over 30% of your after-tax monthly income.

So the Bank is Looking for this:
– A Debt to Income Ratio of no more than 43% usually
– They have the front end and the back end which I will explain
– But let’s say you’re buying a house and it’s 400k and you put down 10%; your monthly payments $1799.78

Ps: @Meet Kevin helped me out with this
Calculator: https://www.mortgagecalculator.org/calcs/debt-ratio.php

3. How to Save up for it
– Most likely you have a deadline I want a house by January or something, I hate renting
– But in reality, renting is always going to be cheaper
– So its best to use the renting period to save for the down payment and not much it

Here is how you save for it:
– Now if you want to buy a house and you want to put down a 20% down payments, it’s not just that you need cash for, you also need closing cost, also emergency fund for the house
– Imagine buying a house today and finding out you got laid of because idk a pandemic, its nightmare
– The idea is, you have to calculate all the cost and divide it by your deadline and see if it’s actually possible and if you can actually afford it

For Example:
– I want to buy this house, its Florida and it cost around $400,000
– My income is around $60,000 after taxes, and currently, I’m able to save half of my income
– Assuming I’m putting down 20% ( that going to be $80k)
– To save 80k if I’m saving 30k a year is going to take me around 2.6 years
– That might be against your plan right, but it makes financial sense.

Tip: remember also Closing cost ( 2-5%) emergency fund (3-6months)

FHA Loans Article: https://www.businessinsider.com/personal-finance/fha-loans-what-are-the-pros-and-cons

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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