CA vs TX

12 Replies

Im just curious. For everyone out in CA or even the NE (Boston, NY), how does a person 1. Get financing for a home. And 2. How are the lenders calculating what someone can afford?

I know the price of a home is dependent on the location but from watching some of the TV programs a typical 3/2 1500 sqft cost roughly $400k. That same home in my area of TX would be about $150k. Lets also assume the buyers are the typical consumers 2 earner income make $120k between them. How would they be able to afford anything in CA?

They might be able to afford something the hood or Watts or a mobile home in California. Lenders are going to look at your credit, tax returns, and income to see what you can afford.

Joe Gore

@Wes Brumit  depends on your location in California. My 3 bedroom 2.5 bathroom 1650 sqft house cost me $165k in number 3 neighborhood number 2 schooling May 2013. I bought a 4 bedroom 2 bathroom approx 1800 sqft for 183k in May. Another great neighborhood the next town over. My property tax is 1.1% and my insurance is .33% 

Location, Location,Location. My husbands aunt/uncle own a house worth over 800k and its less than 2,000 soft in Richmond section of dallas. My grandmother in law owns an old 3 bed 2 bath 1500 sqft in Addison section of dallas worth over a million.

Honestly its like anything else, location means everything. I find television likes Drama so they try to make your jaw drop. While probably true it certainly is selective truth to get those kind of reactions.

I think Richmond is located near Houston not Dallas.

Joe Gore

I know Addison pretty well and do not know any area where a 1500 sqft home would go for that amount of money. The values of homes though are not my question. How does someone making $120-$150k a year gonna afford a home at $400k-$600k? I dont care how good your credit is the LTV just isnt there. How are CA lenders getting that done?

@Wes Brumit,

To answer your question they don't and CA lenders are not going to make a loan on a $400K to $600K home when you only make $120K to $150K.

Joe Gore

@Terry Hershberger they get it done because they allow total DTI many times to be more leinent than other ares and FHA is 625k in many CA areas.... And compared to Texas a 200k home can have higher tax's than a 400k in CA. so that does impact buying ability.

CA home buyers by and large spend much more of their income on their house and less on cars and other non essential items than folks in any other part of the country.

When you run DTI and people have 100k worth of cars a jet ski motor home etc. and living in a 150k home in Texas. As opposed to a CA buyer that will have a used Camry paid for no jet ski no motor home and a house payment double most in the country thats how its done .. the CA home buyer scarifies those things for home owner ship.. Now I may be a little facetious here but not much

@Jay Hinrichs  

I believe incomes are higher in CA. Also I believe there are more dual "bread winners" in CA. And yes taxes can be part of it as well. More homes to get taxes from means lower taxes sometimes.

Not sure I agree on the $400,000 homeowner driving a used Camry and no Jet Ski. Maybe some but I doubt it is the norm. At least not in my neighborhood.


Happy Investing!

@Joe Gore 

Sorry if richmond isn't in dallas. Than I forget the city that my uncle in law lives in it. Is is buy the college and a very expensive area. I just remembered hearing how much his house was worth and going wow. Since Texas is expensive.

@Wes Brumit  

His grandmother bought the house before addison was addison. So its the land not house that is worth the money. The neighborhood that grew up around her is one of the most prestigious in the area or something. My point was numbers can be skewed on a TV show without having all the values.

Not sure about the qualifying.

I think one key point was touched on but not fully addressed. I am a teacher here in Houston making around $50k annually. The same position in CA would make anywhere from $65k - 80k annually and that comes from the higher cost of living in CA. To answer the big question of how they get the loans done, that would be a start. It is cheaper to live in TX 


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