How much apartment can I afford?

With $160K as a down payment and most buildings requiring a 20% minimum down, you're looking in the $700K-$800K range. Do keep in mind though that with a $800K apartment you're looking at roughly $1500 a month (give or take) in maintenance fee's (if you go with a co-op), on top of an average mortgage of $4300. With your salary and the additional amount you have saved, I'd say that the $700K-$800K range would be a good starting point. Now the next question would be, where can you get the most for your money!

Best of luck!

-Rashidah
Simone Song Properties

And there you have it...Advice from a Sage.

firsty,
On a good month you're lucky to wrestle 10K home after the tax man gets a crack at your check.
So a tiny bit'o'math:
10K-(4300+1500)=4200
Now, a prosperous New Yorker such as yourself is going to want some of the finer things in life like electricity, a smart phone, and let's say, cloths. Your frugal and smart and excellent with finance so you can keep those things down to about 800/month. Then there's that transportation thing...350/mo. and food...how could I forget, food...that's got to be at least a grand once you count in the bought lunches, coffees, dinners with friends, take-out...a grand would be cheap!
So where are we now...
We got about 2K left.
Got to have some kind of social life at your age...200/week?
1200 left
student loan...almost forgot.

Rashidah is not you friend

save another 100K
maintain kick ass credit.
study the market and choose a property that does not exceed 3800/mo for cc+mortgage+ins.
You have your work cut out for you.

this math is wrong. Unlikely that the mortgage payment on a $640K loan is going to be $4300.

That said, $750K is about the right range for most shoppers.

ali r.
DG Neary Realty

$750,000 with 20% down gets you $3400 mortgage and $1500 maint which is 30% of gross income. Since that's what many here say is the upper limit of what many coops will allow. Looks like $750,000 is the maximum. But like Falco said, doesnt mean you could actually afford to live a life if you spend that.

(but dont worry, in a year that place might be $650,000)

I'd spend $500,000, eat out 5 nights nights a week, join an expensive health club, travel, etc but that's just me.

Figure on spending 1/4 of your take home pay on living place. 1/3 if you want to, but you really shouldn't, you should save some $$$.

Also keep in mind that the banks seem to want 25% down in a lot of cases, not 20%. Also if you are buying a coop they may have up to a 30% down requirement.

Last do not forget conforming loan limits are resetting on October 1 to 625,500, so $800,000 apartment at $160k down is a $640,000 mortgage and would be then considered jumbo, which causes you to have to have a lot of cash sitting in the bank in order to qualify.

Unless I had very secure, dependable income, I wouldn't do leverage at more than 2xhhi. So 400k loan + 160k deposit would be 560k home. If I wanted to spend more, I'd save more down payment or get a better paying job.

I am thinking of putting down 25% on a harlem condo priced at 620K. I make about 140K per year. CC and maitnenace are reasonable. Too risky?

"Unless I had very secure, dependable income, I wouldn't do leverage at more than 2xhhi. So 400k loan + 160k deposit would be 560k home. If I wanted to spend more, I'd save more down payment or get a better paying job."

THANK YOU.

Finally a voice of reason.

Unless you have a 15-year minimum track record of earning at least $200K, incomes at this level and above these days are way too volatile to leverage to the hilt.

For any property over $550K, this board member would vote "no" on your application.

falcogold and REMom - way to go. I would hate to see this person get in over his/her head.

"I am thinking of putting down 25% on a harlem condo priced at 620K. I make about 140K per year. CC and maitnenace are reasonable. Too risky?"

OMG please tell me you're joking. No way can you afford a $465K mortgage on just a $140K income. At best you might be able to afford a $300K mortgage.

thanks mom

Two important factors need to be considered here, beyond income.

First, what are the monthlies on the properties you are looking? It would make a huge difference financially, even if the property is priced the same (e.g., a coop w/ $1,500 monthly maintenance vs. a condo with CC & monthly tax of $1,500 EACH!!!).

Second, OP, how stable is your employment? While I "only" make $250k, my career is extremely stable and I am completely unaffected by the economy. Also, I could always make more if I were willing to work longer hours (because there's a shortage of well-qualified people in my profession). As such, my CPA/FP says I don't need to be conservative.

"my career is extremely stable and I am completely unaffected by the economy."

Bullshit.

No one exists in a vacuum. No one is "completely unaffected" by the economy.

Thanks. There is another property I like at 540K.

has the OP mentioned whether or not the apt needs work? Even if it doesnt, will you outfit the apt with new furniture tailored to the new apt or use existing furniture? If the place needs a new kitchen and bath upgrade, well that can take a nice chunk of your liquidity away pretty fast. Details Details!

Also closing costs. If your buying a $750K condo and financing 80%, expect around 26-30K or so in closing costs when all is set and done. Less for coop.

"OMG please tell me you're joking. No way can you afford a $465K mortgage on just a $140K income. At best you might be able to afford a $300K mortgage."

NYCMatt, I know you're a conservative guy, but that's just over the top. At 4.5%, the monthly payment on a $465k mortgage is $2356. If the "reasonable" monthlies are $1000, that's $3356 total.

On $140k, the guy should have another $4000 in his pocket after paying his mortgage and monthlies every month. Clearly there is a way he can afford it. You may not like it, but telling somebody "no way you can afford" it is just wrong.

From another perspective, $140,000/$3356 is 42, so he even clears the magical 40x ratio.

Obviously other factors should be considered, such as post-closing cash on hand, liabilities and job stability, but a $465k mortgage on $140k income is certainly doable.

Here it is...the 620K is brand new (a sponsor unit). The 540K is in great shape but will put down a new floor and a new tub in one of the bathrooms afterwards. The maintenance on 620K is $600 monthly and 780 on the 540K one. Each has a 25 yr. 421-A with about 20 yrs left give or take. 25% dp saved. I have as secure a job as you can have these days with 15yrs employment with the same company. Annual raisings have brought me to 140K (in line for a promotion to 160K next year if things work out) with a defined pension plan. No other debt...putting a child through college in a few years.

That's the entire story.

falcogold1

do you spend that much on transportation?

>NYCMatt
about 5 hours ago
ignore this person
report abuse "my career is extremely stable and I am completely unaffected by the economy."
Bullshit.
No one exists in a vacuum. No one is "completely unaffected" by the economy.

Union members?

Let's see...
30 day metro card...$104
$40 dollars/week random tiny cab expense...$160
Any other travel expense...like $140 rt to Boston to beg parents for more $$$
Or $35 to travel out to Long Island to get your mom to pay for highlights
So let's just say if your mucho frugal but non-monastic $300
I forgot the telecommunication expense.
Ouch that hurts.

Bloomsday - a 465k mortgage with a 140k income doesn't seem outrageous. Of course it depends on your other month liabilities. But based on some of the numbers you provided, I think you're within the loan range for someone with a 140k income. Sunny.hong@bankofamerica.com

Transportation: Ride a bike to work.
Family-plan w/T-mobile non-smart phone/no data plan = $100.
Asking parents for $$$? Believe me, I'm not a kid.
My wife cuts my hair.
No cable bill.

Current rent for Midtown East 2 br = $2900

"Bloomsday - a 465k mortgage with a 140k income doesn't seem outrageous. Of course it depends on your other month liabilities. But based on some of the numbers you provided, I think you're within the loan range for someone with a 140k income. Sunny.hong@bankofamerica.com"

LOL!

Yeah, listen to the guy at B of A tell you whether you're "qualified". After all, bankers are never wrong ... right??

How much will you have after the downpayment and closing costs?
Do you have a separate college fund setup for your kid who will be attending college in a few years?
Sounds like the $140K is from one income. Probably best to plan more conservatively with only one income in this current economic environment.

I know a couple of people who have been let go recently after more than 15 years of service at the same company. Seniority can be a negative if a replacement of similar quality is available at a much cheaper rate. If there is a change in management, nothing matters.

You might want to assume future raises if any, could be offset by higher taxes/expenses(everything).

Very good points, Sunday.

These days, almost paradoxically, it's the experienced six-figure earners who are most vulnerable; companies are always looking for reasons to go cheaper, and it's that much harder for those folks to replace those incomes.

As a board member, I'm more likely to approve a couple of teachers who together are making $140K over a single person making $140K.

NYCMatt Very good points, Sunday.

These days, almost paradoxically, it's the experienced six-figure earners who are most vulnerable; companies are always looking for reasons to go cheaper, and it's that much harder for those folks to replace those incomes.

You might want to assume future raises if any, could be offset by higher taxes/expenses(everything

Then why do most think RE will continue to go up..

BLOOMSDAY,

At 4.25% your mortgage will come out to $2300, but about $600 of this should come back in the form of a tax deduction. Let's call it $1000 for maintenance and taxes averaged out, but about $200 of that should come back after taxes. So it's $2500 a month. You're probably clearing $7-8K a month after-tax, so from a cash-flow perspective it shouldn't feel too different for you than now.

As far as the "true" cost here, considering transaction costs, upkeep, maintenance, and cost of capital, I think 0.5% a month as a fraction of price is a good rule of thumb. So $3100 a month, again in the same ballpark as what you have right now.

inonada, stop trying to be rational.

inonada, Midtown East is about the same as Harlem?

"At 4.25% your mortgage will come out to $2300, but about $600 of this should come back in the form of a tax deduction. Let's call it $1000 for maintenance and taxes averaged out, but about $200 of that should come back after taxes. So it's $2500 a month."

You should never factor anticipated tax deductions into your affordability calculations.

I am not counting my wife's income (about 25K after taxes) becuase she is self-employed and weel, you never know...but it has been steady over the past 10years. And while I am not a teacher, I do supervise them and have tenure.

I'm afraid that really doesn't change your financial picture in any significant way.

But Bloomsday said he has tenure. The fact of tenure would make his salary almost as secure as fixed income. Maybe more secure since a bond could be hurt by credit issues, or inflation. (I'm assuming his salary is indexed to inflation.)

Is it a good time to buy?

The pension will be...if I live that long. For now, the salary is tied to a labor contract. Obviously, in this environment - not expecting any raises. Comparing what I pay in rent today, and the "true cost" of buying ($3,100 per month) its not that great of a stretch.