We often maximize buyer’s qualification by having them use their savings to pay off consumer debt and put less down. For example, paying off debts that total $700 in monthly payments can increase a borrower’s purchasing power by up to $125,000 in purchase price.
Below are some figures to use to help you ballpark qualification with your clients assuming they pay off their debt.
And, as a reminder, we are ALWAYS happy to send a full scenario breakdown of market rate and closing costs tailored to your client’s qualification and area of search!
With $75,000 of gross annual income, and no consumer debt:**
SFR with 3.5% down and FHA financing: $455,000 purchase price
Principle, Interest, Taxes, Insurance and MI: $2,930
Estimated Down Payment + Closing Costs: $27,900
Interest rate: 3.75%; APR: 4.90%
SFR with 20% down and Conventional financing: $540,000 purchase price
Principle, Interest, Taxes, Insurance: $2,800
Estimated Down Payment + Closing Costs: $125,500
Interest rate: 4.375%; APR: 4.49%
With $100,000 of gross annual income, and no consumer debt:**
SFR with 3.5% down and FHA financing: $605,000 purchase price
Principle, Interest, Taxes, Insurance and MI: $3,880
Estimated Down Payment + Closing Costs: $35,000
Interest rate: 3.75%; APR: 4.9%
SFR with 20% down and Conventional financing: $730,000 purchase price
Principle, Interest, Taxes, Insurance: $3,730
Estimated Down Payment + Closing Costs: $162,500
Interest rate: 4.25%; APR: 4.34%
**Assumptions: 1.25% Property Tax Rate and $0 Transfer Taxes per most of Contra Costa County; Property Taxes & Homeowner’s Insurance Impounded; 740 Credit Score; Single Family Home.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
