How much should I spend on a house???

I currently make 40,000 per year. I have basically zero debt, and I live a generally frugal lifestyle, so I do not have a lot of monthly expenses. It has always been my dream own a house as soon as I could ( I am 23 ). I have significant savings of 24,000 in the bank. I would like to keep 6 or 7K in the bank as a reserve fund and put the rest as about a 10% down payment on a house as well as closing costs. My question is this....how much house do you think I can afford. I am hoping to look in the 125,000 range. I know that is about 3 times my income, but like I said, I am virtually debt free, so I have more cash to spend on a monthly house payment.....let's see what you think.

You can certainly swing that much house if you really want it. It sounds like you are terrific with your money.

I would challenge you to sit down and think about why you want a house. From the sounds of it, you are able to save a lot of money renting. Why would you not continue to rent and stockpile cash?

A house is best considered as a "lifestyle choice" and not an "investment". You can almost certainly beat the rate of return on single-family house real estate (even though house gains are tax free) with even a relatively conservative investment portfolio.

If you want to own a house because you are tired of having noisy neighbors and you want more space and you want to stretch out, I understand that.

But think about this--given your age and your current income...You are statistically likely to be making 30% more in 3 years. You will go from entry-level to mid-career in that time.

If you just continue your same lifestyle and savings habit, you could be waking up in February of 2010 with $100,000 in the bank (or invested), and no obligations.

Depending on where you live, $125,000 is going to buy you a house that needs work and time and TLC. There are going to be ongoing expenses just to keep the place up. Your utilities are going to be higher than you are paying now. You will have to mow and rake and shovel. You will have to worry about neighborhood property values and real estate taxes and homeowners insurance and PMI.

Just some food for thought :)

you should look in the midwest housing there is alot cheaper.

Go talk to a loan officer at a bank in your area. Take your latest income tax return with you.

that all depends on your location..if you have a family you need a bigger place..so i would say look at the homes in your area about amount ,land,and property taxes.
best of luck!

You need to speak to a loan officer and ask them to "qualify" you for a house purchase. They will take your financial information and determine exactly how much you qualify to purchase. Qualifying does not commit you to anything unless you decide to sign papers. Get at least 3 different quotes.

The common equation is a monthly mortgage payment equal to 1 week's "take home" or net salary.

Speak with a reputable Realtor, who will advise you on how much house you can get for that particular monthly price.

What you want is EASILY attainable. But in today's market, a house that price will probably be a "fixer-upper" unless you live in a very rural area.
Are you a handy type, liking to work on home-improvements (and doing them well??)
Take all this into account when looking for a home. Can you spend TIME on it, or do you WANT to? Or would you rather spend more for a finished house, but less on improvements & upkeep?

Sweetness you shouldn't be telling people on the internet all your personal financial information! Don't you know there are sharks in these waters?

You need to do Step #1: Go to several loan companies and get pre-qualified. Select one that can offer you the best mortgage terms. They can also advise what price range you should purchase in. Step#2 interview realtors. Find one that has a designation such as GRI, or CRS and one you feel comfortable with. They will advise you on the rest of the process.

Good Luck! And thanks for jumping off the fence!

Without all your other figures, mortgage lenders will tell you you can afford two and a half times your annual salary.

But keep in mind - If you put ALL your money in a mortgage payment, you won't have any money left for homeowner's insurance, gas, groceries, utilities, phone bills, etc.

Figure out what budget works for you, break it down monthly, and then take yourself to a mortgage company and shop around for the best one. If you're single, consider if you get married, have kids, etc for what kind of house fits for you.

Good luck!