Ep.20 - Home-Buying in LA: $150k Edition

$150k a year puts you in the top 5% of earners as an individual and top 12% as a household. If we use income as an imperfect proxy for class, you are RICH! You can take your pick in the LA housing pool, EXCEPT that you still can't afford anywhere on the Westside.

Here is everything you need to know.

HOUSE OR CONDO?

You now have some solid options with single-family houses.

HOW MUCH HOME CAN YOU AFFORD?

Up to $700k.

YOUR BEST MORTGAGE PROGRAM

The best program is the 5% fixed rate conventional loan, with a piggyback loan if it is the conforming loan limit ($675k). If you can't do a piggyback loan, you will have to put down at least 15%.

You won't be able to quality for an FHA loan because it is above the conforming loan limit, which is explained in episode 3.

CREDIT SCORE

680 and above, but 740 gives you the best rate, which is 4.125% right now.

MAX MONTHLY DEBT ALLOWED?

Housing Related Debt (36% of your income): $4,500.

Total Debt (45% of your income): $5,625. That is the total amount of all your debt, including your mortgage, credit cards, student loans and car loans. So if your mortgage plus existing debt adds up to more than $5,625 a month, then you won't be able to buy a house.

HOW MUCH CASH DO YOU NEED?

5% Conventional Loan with another piggyback loan: On a house of $700k, you should prepare $50-60k.

15% Conventional Loan: you should prepare $125k. THAT is a lot of money!

HOW MUCH EXISTING DEBT CAN YOU HAVE?

If you make that much, you probably have two incomes or an advanced degree with a lot of debt. Realistically, you can have up to $1,000 outstanding monthly debt (including credit card, student loan, car loan).