Quote:
Originally Posted by sketchyt
I read that comment in the category of: technically do-able but not a great idea.
|
It's not even technically doable, even if we accept that 2 people making $20/hr can save up a $51K down payment in any reasonable time frame.
The maximum Gross Debt Service ratio for insured loans is 39%; so at $20/hr for 2 people, that means they can be spending $2,600/month on their mortgage, property tax, heating, and 50% of condo fees (if any). Just the $2,700 mortgage alone is too high, and that doesn't even get into the stress test, which would require them to qualify for a $3,100-3,200 monthly payment (plus those other costs).
Assuming 10% down on $510K ($459K mortgage), the buyer would need to qualify for a $3,150 payment. Add in about $500/month for property tax and heating costs and you're at $3,650. If you divide that by the 39% max for GDS, and they'd need to earn about $9.4K/month, which is $113K a year (or $28/hr or so) to get that house with 10% down.
By contrast, two people making $20/hr would only qualify for about a $310K loan, so with 10% down they could afford about $344K. But then, virtually anything that cheap has condo fees as well, so that would drive down the maximum loan amount even more, probably into the $280K range.