First time buyer. Please help :-)

First off, I commend you for saving as much as you have. Very well done with a modest income. Now, I know it sounds "sexy" to have a "cozy little nest in the city," but as a flight attendant who is constantly traveling, don't you want a crash-pad opposed to an overpriced cubby-hole money-pit on the most expensive Island in the country? Use your money to have fun and take advantage of flying free while you can!

I'm not too familiar with HDFC apartments, but I believe that the big restriction (there could be more) is that you must make under a certain amount of money, which it looks like you do. In that case, you could probably buy one, the only thing is that you will then need to turn around and sell it to someone with a similar financial profile in the future.

Other than HDFC apartments, you would only be looking at small, no view co-ops, and it sounds like you would not have enough left over income to pass the board.

(Matthew Russell - Brown Harris Stevens)

I agree with NYC10007 100% on this. However, if you're going to go ahead anyway, I would suggest only do it if you can find something livable that's closer to $150K.

Thank you for getting back to me NYC10007, MRussell, and Sunday.

@NYC10007 - I grew up in NYC so I wanted to stay in NYC( I currently live in Queens with my family), even though I know I can might as well stay in other states for a larger house( say, Houston),but owning an apt in Manhattan is my DREAM!!.
Crash pad is no fun at all. I've done it before around Newark when I first started. I am not constantly travelling like any other flight attendants with my schedule of 15 days per month, so I have good enough time to enjoy the city when I am in town. I will take ur advice and save up as much as I can... but how much do I have to save up before a thumb up to buy?

@ MRussell - How much money do I have to have left in order to pass the board? I am flying a lot more this year so I def. will make more than 33k this year.

@ Sunday - I will try to find something closer to 150K like you said. Thank you.

also, here's the link to the government grant:
http://www.nyc.gov/html/hpd/html/buyers/downpayment.shtml#familycomposition

The amount you need depends on the building, and in that price range it can vary wildly. Some apartments may be in that price range because the board is very strict and the sellers need to sell it at a substantially reduced price in comparison to other apartments because of the board requirements (the board may want 50% of the purchase price in cash after purchase for example). Other boards may require that you have 2+ years of maintenance in liquid assets. I think your best option is to look into the HDFC apartments or keep renting. The last thing you want to do is liquidate all of your savings, etc and then find yourself in a situation where you need that money, for whatever reason. You are better off waiting 5-10 more years and accruing more savings for the right apartment instead of trying to force yourself into one now. At least that is my advice. Whatever choice you make, I wish you the best of luck.

Hi Skippymartini- I think you are absolutely right and will look into HDFC apts. I don't think i can afford "regular" apt yet. :-(... but I will try and work harder to save up more money in the future.
Are you familiar with HDFC apts? is it true I can never make $$ off the apt in the future?

Thank you :)

HDFC is a very good way to go as there are some small buildings in good neighborhoods--the listing below is on a great block and just might work for you because the maintenance is only $275, boosting your loan capacity by$75k. Don't be afraid to pursue every opportunity in your budget. In 1989 there was a co-op conversion on the same W89th St block where units sold for $25,000, just a tiny fraction of neighboring condos at the time, because the co-op was financially troubled--now those same units start at $600,000 which is much closer to neighboring condos. Another option is for you to apply for rentals in Mitchell Lama buildings (why own when you are guaranteed an affordable rental?). Some Manhattan ML buildings have open wait lists particularly for studio apartments.

http://streeteasy.com/nyc/sale/538040-coop-135-west-89th-street-upper-west-side-new-york

That listing on W 89th St HDFC, last comp in the building was initially asking $329k and sold for $285k. Maybe you could get the current listing for 275k. You might be able to secure an FHA loan for $250k that costs less than $1150 per mo all-in after taxes. Where can you live in your own place in a prime neighborhood on the Upper West Side for less than $1200 per mo? Is there any chance that ten years down the road, the building pays off some underlying mortgage and exits the HDFC program? Does anybody know? If so, then stretching for this opportunity would be really worth the risk.

PMG, good advice

PMG, please explain the math/assumptions for 'you might be able to secure an FHA loan for $250k that costs less than $1150 per mo all-in after taxes.'

galateakiss, the best way to determine what you can afford is to create a budget that outlines your spending. If you post your budget here, you'll get feedback from people who are overly pessimistic and those who are overly optimistic. People here can let you know if you missed or over/underestimated anything. Make up your own mind based on your comfort level after reading both sides.

Borrow $250k @ 4.25% w 0.75pts 30 yr fixed from Emmigrant Savings Bk (courtesy of bankrate.com). Mortgage payment: $1230 per month, initially 72% tax deductible. Maintenance: $275 per month, assuming 50% tax deductible. Monthly total payments: $1505. Tax deductible portion $1023. Assumed marginal tax rate 25% Tax savings would be: $256. Net effective cost: $1249 per mo. Sunday, you are correct, I may have been $99 off in my back of the envelope assessment. But the prospective buyer is still getting ownership of a small one bedroom in very good condition on a great block for about $32k down and $1249 per mo. or 41% of current gross income.

galateakiss: I was also a first time buyer and we bought into an HDFC building. What we learned is that they are all different, the income restrictions are not always super strict. The limit for our building is around $300,000 combined, which is very generous, and increases. But you would have to make close to this amount to live comfortably in my building.

The thing I found surprising when shopping around was that many of the HDFC apartments were far too expensive for someone who made below the required income (BTW, we were not specifically looking at the HDFCs, they are just more common in the area we were looking in). This meant that mommy and/or daddy had to buy these for their kids and often those buildings were wrecks as a consequence. Resale was definitely an issue in the higher price bracket. But if you are looking at things less than $300K, look good and are decently located then maybe it won't be such a problem.

Good luck!

By the way, most people would think that someone earning $36k a year couldn't own anything in the W 80s--it might be possible here. If this apartment were a free market rental, I would put the rent at $1700 to $1800 per mo, which is unaffordable to the OP. Cash flow savings per month: $451 to $551 per mo. That's a pretty compelling reason to spend your $32k of savings on a deposit.

OP's tax savings would be much less than estimated based on 36k income. Also, was mortgage insurance included in the mortgage payments?

Yeah, tax deductions will only amount to $100 a month at best.

I thought an FHA loan allowed for a low down payment with no mortgage insurance only a slight interest rate premium? If it costs 0.5% interest premium, that's $75 per mo extra.
Sunday, and Inonada, do you two ever contribute to possibly meeting someone's dreams or do you just trash all prospective homebuyers. I think if you are arguing over $150 to $200 dollars extra cost of ownership when the savings over rent is $451 to $551, you are both doing a disservice to OP.

That's not a big studio nonetheless it's one of the cheapest i've seen midtown:
http://www.leiterrealty.com/listings/search_.php?op=mi&id=534
If you're single, that is a good pied a terre since you're traveling a lot (I couldn't imagine myself living in that shoe box every day of the week).

but wait - we may know a certain suburban dwelling 40yr old man who would rent it out from her on weekends when she is out of town.... I'm pretty sure he's willing to pay $700/month

PMG: "Sunday, and Inonada, do you two ever contribute to possibly meeting someone's dreams or do you just trash all prospective homebuyers."

Inonada is far from that characterization. In fact, he often does the opposite of what you said, though I suspect he does so for entertainment purposes. I think he enjoys working the numbers/doing the analysis.

As for me, I'm far less patient than Inonada, but I believe I contribute in my own way. You might not like my delivery or my message, but do you expect everyone to agree with you or that you agree with everyone else here?

"I thought an FHA loan allowed for a low down payment with no mortgage insurance only a slight interest rate premium? If it costs 0.5% interest premium, that's $75 per mo extra.
Sunday, and Inonada, do you two ever contribute to possibly meeting someone's dreams or do you just trash all prospective homebuyers. I think if you are arguing over $150 to $200 dollars extra cost of ownership when the savings over rent is $451 to $551, you are both doing a disservice to OP."

All I've said here so far is to correct a mistake on what amount of tax deduction one can expect at that income, nothing else. I believe the OP is best served by facts, our opinions are secondary to the facts however wise we may think we are.

On the "meeting dreams" bit, read my post to evnyc saying how it isn't unreasonable that her "depressing" $500K options were being bought left-and-right if they rent for $2500+. Or else the suburban guy looking for a pad in the city, where I thought it was a fine idea financially because of the low-end stuff he was looking at and the relatively small amount of money it was to his income & wealth. That's two in just the last week.

On this sort of $300K place you're promoting, I think it's fine buy vs. rent for someone looking long-term if they have their eyes open to the fact that they're responding to government incentives that will likely be removed over the next decade. That said, I'm making a comparison against market-rate rentals. If this person is eligible for low- or middle-income rentals, then the story would look different IMO. I don't knw the options here.

Putting aside the rent vs. buy of low- and middle-income housing, I don't this particular OP can really afford a $300K place. With a gross income of $36K, this person pays around $3K to social security, and around $3K to federal/state/city, leaving $30K or $2500 a month. Buying this place would have monthlies of your $1500, with a $100 tax savings, but that's offset by $100 in mortgage insurance, say. That means this person will spend $1500 on housing, with only $1000 for everything else. That's $33 a day. Maybe she now nets $3000 a month, leaving her with $1500 for everything else, or $50 a day. Remember, one of the perks of being a flight attendant is free flights for vacations (which presumably results in a lower wage than would be paid otherwise), but if money is tight, it's a wasted perk. Just doesn't seem like a good idea to me to spend $1500 on housing and to only leave $1000-$1500 for other stuff, but that's just my opinion. Take the gross income up to $60K, where the net income gets in the neighborhood of $3500-$4000 a month, and I'm very comfortable with spending $1500 on housing. A debt-to-gross-income of 4x is a little high, but healthy; the 6-7x you're suggesting is insanity IMO. Maybe it would be lent 4 years ago, but I doubt anyone would lend it now.

OP: I think on a gross $36K, your $150K-debt dream is a lot more reasonable than the $250K-debt dream PMG projected onto you. If you're netting $36K, which means grossing $45K, then $150K debt seems just fine, and $250K debt is still a stretch. But you probably already know this: that's why you're looking at $200K places, not $300K places. Regardless, though I disagree with her financial views of what you can afford, I think she has some great ideas on where to look.

I'm also in this OP's position as a first time home buyer, and I am also living with my family at the moment. However, my savings are 90k, my income is 60k and I'm pre-approved for about 300k AND EVEN WITH THESE NUMBERS I WOULD NOT FEEL COMFORTABLE SPENDING MORE THAN 200-250k on an apartment. Why? Because you never know what can happen tomorrow. Maybe you lose your job, maybe you have to start paying child support, maybe you lease a new car, or fall behind in your cc debt. You can calculate monthly spending to a penny, but as soon as one factor in the calculations changes, the whole thing collapses and you start falling behind on bills, credit cards and then mortgage. I think it's completely preposterous for him to be even thinking of buying. That's how we got into this whole housing mess in the first place - people with unstable financials wanting to buy and mortgage lenders only too happy to make their dreams come true without thinking of the consequences.

Ok, now that I'm done with the ranting, here's some useful things to consider:
- cost of living in Manhattan is significantly higher than living in Queens and cost of living alone as opposed to with mom and dad is also much higher. take a moment to consider additional expenses you don't currently have
- not sure about what gov't programs cover, but closing costs for coops will be upwards of 5k
- such low mm doesn't cover all utilities, factor in costs of elect, internet, tv
- moving costs, and the cost of furnishing a new place will also be a few thousand $
- living in the city is indeed a dream for many but if your monthly budget is so tight, will you have enough $ to go out and actually enjoy city life?
- the smartest piece of advice I received from my parents regarding an apartment purchase: make sure you have enough $ left in the bank afterwards to cover living expenses and mortgage for one full year

Just curious - what is HDFC? It sounds like it is some sort of subsidized housing for low or middle income people. Thanks.

questions re HDFC

a) what's stopping rich daddy from having his college student son (low earner) buy an apt and have the family use it as a pied a tierre?

b) what happens when said son starts making more than the limit? ie are tax returns investigated yearly?

She lives at home and is turning 30, and now wants out. Presumably, she's not paying rent. That is probably how she saved the $30k. Good job. But, her savings rate stops cold the minute she moves out. Is she comfortable with that? Can she actually live on a tight budget once all her cashflow is accounted for?

The other big issue is marriage. She's 30s now. Over the next 5-10 years, how many women will be coming into a marriage with an illiquid, or worse, underwater albatross? Who needs it? Stay mobile. Stay flexible. Don't weigh yourself down. In fact, in light of your career, you are more likely to meet a man who lives in another city. Recall conventional wisdom to make sure you buy something you can forsee living in for 7 years, esp. with depreciation more likely than appreciation. The bull market is over, and this rule will come back with a vengeance.

In light of her travel schedule, she may consider getting a few roommates (shared expenses) and moving closer to the city (Brooklyn, etc) to get her independence. Do that for a year and formulate a more realistic budget while not living at home.

The welfare HDFC disincentive sure adds an interesting wrench into the mix. B/c, in any other situation, with an income of only $40k, it would be wiser to consider staying at home, keep saving money, and find ways to increase your income, thereby giving you better foothold as a buyer. I also don't like the idea of making this "dream" happen by borrowing money from her sister. There is always a segment of 1st time buyers that are not really ready to buy, but just doesn't want to rent.

Even if the numbers work with her $30k savings, as per inonada's post, she has no money in the bank. On that note, I'll play devil's advocate with the fixation about having 1 year living expenses when buying. While I naturally agree, this advice is even more applicable to renters. With a mortgage, you can get forbearance and negotiation if you're late. In contrast, a landlord will just evict you once you stop paying. In that sense, renting seems riskier than owning.

Does she own a car? Factor parking in the city, but I assume UES/UWS will just be street parking for you.

It would also serve her to read my thread b/c there were a few good posts about the hidden costs of ownership.

@printer LOL, but $700/mo to own a studio exclusively is profoundly different than $700/mo for a weekend sublet.

Hello forum! I just landed in Rome and saw all these response...

I am def. NOT going to consider looking at any property over $200K( But thank you for you suggestion, PMG :) ) just like BKLYNCHICK said... I am not sure what's going to happen tomorrow... Especially with the recent merger of two airlines I didn't have to worry about losing my job but it's hard to say how much I am going to make. So I would have to deal with something that I am more comfortable with, even on a lower scale of pay.

@ Captive914 - To answer your questions, I don't own a car and I DO pay rent at home, not much but about $300 a month to help out my mother. I lived in the city before therefore I am not new to the urban life style; expenses and all, and I had no problem with that. I had to move back home a several times because I can never seem to keep the lease( roommate had to move to other state..."my brother needs the place"... so I was exploring the real estate market so I have a stable place to stay in the city. I feel I am too old to stay home and I have absolutely no privacy here - I have to share a room with my mom. My salary will increase for the next few years or so, and it really depends on how many hours I flew per month. Also on the marriage issue- to be honest, I am not very optimistic about marriage at all, so I MIGHT not consider getting married. That's why I decided to own a my own place instead of "fetching" a husband so that I can live off of him. I dated guys from other state and I will not do anything long distance relationship again. But Thank you overall for your generous advices.

It seems it's not wise for me to own anything at this present moment...? :(

galateakiss: I totally understand your dream of owning a home in Manhattan - I had been in that stage of life too, single and dreaming to own my own apartment, but in a different city. But I tend to agree with Captive914, it's not the best idea to own something so illiquid in case you meet someone. Life is funny, if you plan to meet someone and get married by age x, it probably won't happen, but the minute you have the idea to stay single for the rest of your life, you may meet Mr. Right. That said, I think you should find a rental you absolutely love and decorate it nicely so you feel great every time you step into the apartment after that long haul flight. That way you don't have to hope to meet someone to get out of your parents' place, but then it also gives you some flexibility if you do meet someone.

Aww thank you for your heart warming comment WC_NYC :)But I've done rentals many times before and it was just nothing but money wasted down the drain :-( I just thought it might be a better idea for me to own, at least I can force myself to "save", as long it's not a tough stretch like purchasing a $300K home.
I want to make myself Ms.Right, and I believe Mr. Right will come along... or not, I will be fine either way :)

The State of New York Mortgage Association (SONYMA) provides below market financing to 1st time homeowners with as little as 1% down, Last time I check many major NYC banks offered SONYMA financing.

You might be able to squeeze by on a wlak-up with low maintenance with SONYMA, because some have been selling in better parts of Manhattan for under $250,000.

"rent is just money wasted down the drain".

A common shibboleth, but it is not so black and white. There is a big difference b/w paying out a 15 or 30 year mortgage vs. selling something before its paid off. In the first 7-10 years of a mortgage, you are paying about 90% interest. ie: You are building almost no equity. So, in a sense, owning is ALSO "money wasted down the drain", just in the form of interest expenses, instead of rent. Recall, when buying, you have taken a huge loan, and that isn't free. You pay huge amounts of interest.

Also, at your income level, you take the standard deduction, so mortgage deduction doesn't even offer you much advantage.

Buying a tiny studio is not your only option for moving out. It would be wise to at least consider a bunch of roommates in the location you like. At least you'll have numbers to compare whether buying is the right decision.

Buying for the sake of not renting can cost you a LOT more, if you sell before 10 years, or the price goes down.

galateakiss, play with this a little bit (Buy vs rent)
http://www.nytimes.com/interactive/business/buy-rent-calculator.html

Holy crap.. .SE is so so so fking boring w/o me!

teakiss, sometimes in life when everyone is giving you advice, you've internalized all the social rules, and that $600 prada shoe just looks way way way out of reach.... THAT's when you gotta pop open that Budweiser, pull the emergency chute... drop your skivvies and slide down head first....

this is really a good site.

=================taylar
Mortgage Broker
[url=http://www.advicemortgages.com/category/mortgage-calculator]Mortgage Broker[/url]