# How Much House Can I Afford in MA?

How Much House Can I Afford?

When determining how much home you can afford in Massachusetts with an annual income of \$100,000, several factors come into play, such as your down payment, loan type, and other financial considerations. A general rule of thumb is that your total housing expenses, including mortgage, property taxes, insurance, and homeowner association fees (if applicable), should not exceed 28% to 33% of your gross monthly income.

Let's break down the calculation:

Step 1: Calculate Monthly Gross Income Your monthly gross income is \$100,000 / 12 = \$8,333.33

Step 2: Determine the Maximum Housing Expenses As per the general guideline, your total housing expenses should not exceed 28% to 33% of your gross monthly income.

28% of \$8,333.33 = \$2,333.33
33% of \$8,333.33 = \$2,749.99
So, your total monthly housing expenses should ideally be between \$2,333.33 and \$2,749.99.

Step 3: Factor in Other Costs Remember that your total housing expenses include more than just the mortgage payment. You'll also have property taxes, insurance, and possibly homeowner association fees. It's essential to consider these additional costs to determine the ideal home price.

Step 4: Calculate the Mortgage Amount The mortgage amount you qualify for will depend on various factors, including the interest rate, loan term, and down payment. As a general guideline, lenders often approve mortgages with a debt-to-income ratio of up to 43%. For simplicity, let's assume a Debt to Income Ratio of 43%.

Monthly Gross Income: \$8,333.33
Maximum Monthly Debt (43% of income): \$8,333.33 * 0.43 = \$3,583.33
Total Monthly Housing Expenses: \$2,333.33 to \$2,749.99 (as calculated in Step 2)
The remaining portion of the maximum monthly debt can be allocated to other debts or expenses, such as car loans, credit card payments, and other obligations.

Step 5: Calculate the Home Price To estimate the home price you can afford, consider the down payment you plan to make. A standard down payment is typically 20% of the home's purchase price. Let's assume a 20% down payment.  There are great first time buyer programs 5% down.  Any down payments less than 20% - mortgage adds PMI - Principle Mortgage Interest.

Down Payment: 20% of the home price
Mortgage Amount: Total Monthly Housing Expenses / Mortgage Interest Rate / Mortgage Term
By adjusting the down payment and mortgage amount, you can find a suitable home price within your affordability range.

It's important to note that this is a rough estimate, and you should consult with a mortgage lender (We have great lenders - just ask) to get a more accurate calculation based on your specific financial situation and the current market conditions. Additionally, consider your long-term financial goals and ensure that the chosen home price aligns with your overall financial plan.