Mortgage Comparisons for a 2,000,000 dollar loan. Monthly Payments by Interest Rate and Loan Payoff Length. Amortization schedule table: $ 2,000,000 30 Year loan at 5 percent. 10,736.43 per month.
This was the basic rule of thumb for many years. Simply take your gross income and multiply it by 2.5 or 3, to get the maximum value of the home you can afford. For somebody making $100,000 a year, the maximum purchase price on a new home should be somewhere between $250,000 and $300,000.
Banks, credit unions and online lenders frequently offer loans up to $1 million for established businesses. The Small Business Association (SBA) also backs loans of $1 million, but to apply for funding, you will need to submit an application through an SBA-approved lender.
How Much House Can You Afford?
| Monthly Pre-Tax Income | Remaining Income After Average Monthly Debt Payment | Maximum Monthly Mortgage Payment (including Property Taxes and Insurance) with the 36% Rule |
|---|
| $3,000 | $2,400 | $480 |
| $4,000 | $3,400 | $840 |
| $5,000 | $4,400 | $1,200 |
| $6,000 | $5,400 | $1,560 |
30 Year $3,000,000 Mortgage Loan
| Loan Amount | 2.50% | 3.00% |
|---|
| $3,000,000 | $11,853.63 | $12,648.12 |
| $3,000,500 | $11,855.60 | $12,650.23 |
| $3,001,000 | $11,857.58 | $12,652.34 |
| $3,001,500 | $11,859.55 | $12,654.45 |
Monthly Pay: $1,013.14
| Monthly | Total |
|---|
| Mortgage Payment | $1,013.14 | $364,732.03 |
| Property Tax | $300.00 | $108,000.00 |
| Home Insurance | $100.00 | $36,000.00 |
| Other Costs | $250.00 | $90,000.00 |
A generally accepted rule of thumb is that your mortgage shouldn't be more than three times your annual income. So if you make $165,000 in household income, a $500,000 house is the very most you should get.
The maximum amount for monthly mortgage-related payments at 28% of gross income is $933. ($40,000 times 0.28 equals $11,200, and $11,200 divided by 12 months equals $933.33.) Furthermore, the lender says the total debt payments each month should not exceed 36%, which comes to $1,200.
The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a $120,000 to $150,000 mortgage at $60,000. You also have to be able to afford the monthly mortgage payments, however.
Amortization schedule table: $ 600 30 Year loan at 5 percent. 3.22 per month.
Even if you just took out that $175,000 mortgage, your monthly payment would be about $887 on a 30-year, fixed-rate mortgage, or $1,339 on a 15-year, fixed-rate mortgage. That's 12 percent to 18 percent of what you expect in retirement income.
Current Mortgage and Refinance Rates
| Product | Interest Rate | APR |
|---|
| 30-Year Fixed-Rate Jumbo | 2.875% | 2.918% |
| 15-Year Fixed-Rate Jumbo | 2.625% | 2.704% |
| 7/6-Month ARM Jumbo | 2.25% | 2.654% |
| 10/6-Month ARM Jumbo | 2.5% | 2.693% |
Your mortgage payment should not be more than 25% of your take-home pay. You'll need to pay at least 10% down on a 15-year or less fixed-rate mortgage, but 20% is even better because you'll avoid paying private mortgage insurance (PMI). Notice that is a 15-year mortgage, not 30.
How to Pay Off Your Mortgage Faster
- Make biweekly payments.
- Budget for an extra payment each year.
- Send extra money for the principal each month.
- Recast your mortgage.
- Refinance your mortgage.
- Select a flexible term mortgage.
- Consider an adjustable rate mortgage.
The rule of thumb is you can afford a mortgage where your monthly housing costs are no more than 32% of your gross household income, and where your total debt load (including housing costs) is no more than 40% of your gross houshold income. This rule is based on your debt service ratios.
The larger your down payment, the lower your monthly income will need to be to afford a million-dollar home. Generally speaking, though, for most people to afford a 1 million dollar home, they will need to make roughly $220,000 per year. This figure alone is not enough to get you a million-dollar home.
Down payment chart for a 300,000 property
| Percent Down | Down Payment | Loan Amount |
|---|
| 10% down for a $300,000 home | $30,000 | $270,000 |
| 15% down for a $300,000 home | $45,000 | $255,000 |
| 20% down for a $300,000 home | $60,000 | $240,000 |
| 25% down for a $300,000 home | $75,000 | $225,000 |
So realistically, most first time home buyers have to put down at least 3% of the home's purchase price for a conventional loan, or 3.5% for an FHA loan. To qualify for one of those zero-down first time home buyer loans, you have to meet special requirements.
Monthly payments on a $150,000 mortgageAt a 3% fixed interest rate, your monthly mortgage payment on a 25-year mortgage might total approximately $709.87 a month, while a 15-year might cost roughly $1,034.53 a month.
Monthly payments on a $150,000 mortgageAt a 4% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $716.12 a month, while a 15-year might cost $1,109.53 a month.
