If you make $50,000/yr, what's your max purchase price? We'll cover that and how you can figure out a good ballpark of the max purchase price when you're shopping for a home.

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0:00 What you'll learn
0:37 Calculating your income and debts
3:29 Your max housing payment
6:37 CalmMoment
7:59 Payment calculator
11:17 What you can afford on $100/yr

Hey, Kyle here with winthehouseyoulove.com. Today, we're talking about how much house you can afford with a $50,000 per year income. I'm going to show you how you can actually calculate this for yourself with your own income and your own situation. So what you're going to learn is number one, why a debt-to-income ratio matters also how to calculate your max monthly payment on a mortgage.
Right? And how to find your max purchase price, because ultimately you want to know, hey, we make this much money, how much a house can we actually qualify for? This is going to give you the answer without having to go through getting prequalified with a lender. So first let's talk about the income in general. $50,000 per year is going to turn into a gross monthly income of $4,166 per month.
Now lenders use gross income. You might be thinking well, you know, obviously I take home a lot less than my gross income. I might have taxes and I also have to pay maybe insurance or retirement. So, I know it can be tricky, but lenders use gross income. That's what all loan programs are based off of.
So we're going to use those numbers here. $4,166. All right. Now what we want to do is we want to add up all of our debts and don't think of expenses. Think of only true debts. So for instance, in this example, let's say we have a car payment for $300 per month. We have a credit card, let's say it's $200 per month.
Student loans. Let's say we have $20,000 in student loans, but we're on an income based repayment plan. And right now we're not paying anything. So if we're on a conventional loan, we can actually use $0 per month as our student loan payment. And I do have a video. I'll put it up here for you to look at that, if you want look at income based repayment. And then if you have child support or alimony, you would include that expense in there as well. So you're only calculating debts plus alimony and child support. Things that are not included are things like your phone bill. Let me do an X here. Your phone bill is not included, utilities not included, rent not included, taxes not included in your debt-to-income ratio and any other living expenses.
So gas, groceries, and you know, whatever other spending you do. It's not included in your debt-to-income ratio. So when we go through an add all of these together, we can see that our total debt payment is $550 per month. That's what we pay in true debts per month. So this is going to help us figure out our debt-to-income ratio.
So to figure out the debt-to-income ratio, we take our total debt payment divided by our gross monthly income. And what that does is that gives us a pre-mortgage debt-to-income ratio of 13.2%. And what I mean by pre-mortgage is this is your debt-to-income ratio without considering you're going to have a mortgage payment added in here.
So something that's interesting is that your rent payment is not included in your debt-to-income, but your mortgage payment, your future mortgage payment is. So what we have to do, it was figure out how much our estimated mortgage payment is going to be to be able to see what our debt-to-income ratio limit is going to be.

-- Legal --

Kyle Seagraves
NMLS# 1701021
Motto Mortgage Alliance
8900 N. Dixie Dr.
Dayton, OH 45414
Equal Housing Opportunity