How to find out how much I can spend...?

Question

Hi everyone! I'm sure there's some resources out there but I'd like to hear what this community has to say about where to go or which calculator to use to find out how much you can afford based off of income, credit, etc.

Thank you for your time!

Joe Funari · Answer

@Chris Shelton I would recommend a lender. The one I recommend here in TX is @Andrew Postell. He is my preferred lender. He is a fellow investor and a guru at financing investment properties. He is forgotten more about financing than I will ever remember. Reach out to him directly. Its well worth your time to have a phone conversation with him.

Bob S. · Answer

Call a mortgage broker, However its typically 50?%DTI,

Nathan Gesner · Answer

Talk to a lender. In fact, talk to several lenders.

Brandon Rush · Answer

Hey Chris,

To truly determine how much you can afford I would recommend you get pre-approved through a lender. Until you get pre-approved, you will be doing nothing but making assumptions. You will also start changing numbers around for them to work in your favor vs facing the reality of what you can actually afford. Many people don't get pre-approved because they fear their credit dropping. If this is your primary fear, stop worrying and get pre-approved. The credit hit is minimal and you don't want to spin your wheels for month thinking about how much you can afford vs knowing how much you can afford. Don't waste too much time thinking about it! I would recommend getting pre-approved through a recommended lender versus someone random of the internet.

Good luck on your journey!

Tiffanie Figueroa · Answer

I am local to the area and can refer you to a great lender if you need one

Andrew Postell · Answer

@Chris Shelton thanks for posting!  Always great to hear from a fellow Texan.  @Joe Funari thanks for the mention.

You've got some good comments above but I will tell you some general "rules of thumb" here if you don't mind.

I'm also assuming you are talking about an investment property.  If it's anything different, please let me know.

Generally speaking your downpayment is going to be your biggest hurdle in what you can "afford".  When you buy a rental property your lender should be using the rental income to help you qualify...not all do so make sure you are working with one that does.  So if the property is rented (and sometimes you get credit for the rental income even if it's empty) then it will be a wash against you.  In theory, you could afford ANY amount as long as you have your downpayment since we are using the rents to help you qualify.  Again, this is in theory so you can understand the concepts of it.  Of course speak with a lender to know specifics but that's it conceptually.

So if I am using rental income I need to be prepared for 20% downpayment...or if I am using the BRRRR Method then 20% equity when I refinance.  Sometimes you might need 25% but getting prequalified will tell you the specifics of it.  Now, San Antonio area is a great area to invest in.  There's no need to go out and buy a $500,000 investment property.  As a matter of fact, two $250k properties will outperform a $500k property in San Antonio.  The winning formula in San Antonio is a $250k, 3BR, 2BA home.  That's a great rental.  And if it's a lower price - even better!  The lower the price point the better it will perform.

So should you get prequalified - yes!  But that's some basic concepts to know about.  Hope all of it make sense.  Thanks for posting!

Theresa Harris · Answer

Best option is to talk to your bank.  they will have access to all of your information.

Eliott Elias · Answer

Get pre approved by a lender.

Carlos Ptriawan · Answer

the calculator is really just a guideline but how much you can spend really depends on your lifestyle and what kind of other income/debt and your risk profile appetite.

investing in real estate may not be suitable for someone making only 40k/year but decided to have a brand new land rover, this business would kill you fast.

but if you literally have zero debt and have good discipline then this business is good.

for REI general guideline is 1/3 of net income can be attributed to real estate.

How to find out how much I can spend...?

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