Homes for Sale Near Me in Conroe Texas
Conroe Texas is the perfect place for your new family home, Come find out why and shop the latest listings
All new home buyers feel the same thing when they start shopping, How Much House Can I Afford? It can feel frustrating to figure out and this a totally normal feeling, especially with home mortgage rates being in the news so frequently. We aim to help you understand how the process works because home ownership is absolutely within your grasp with the right knowledge.
We have helped over 10,000 people buy a new home and get a mortgage, so we can give you some specific examples to help you make the right decision for yourself.
Ultimately the best way to know how much house you can afford is to work with a mortgage company to get pre-approved. They will take into account your income and debts to provide you with a concrete answer that you can use to empower your shopping process. A pre-approval is not as scary as it seems, and our mortgage company works with people in all financial situations, so we are comfortable helping home buyers understand their options.
Keep reading below for advice, but if you are ready to speak with a mortgage counselor, you can apply right here.
After mortgage rates, the most common question potential home buyers have is, should I pay off debt, or save for a down payment? If your goal is to maximize how much you can spend on a new home, this is an important question! And most importantly, your debt and down payment savings are things you can control, and feeling in control is an important part of the home buying process.
First we look at four different scenarios a buyer could find themselves in, ranging from having no debt, but a smaller down payment, to having more debt, but a larger down payment. We are using a very typical home buyer, someone with a $75,000 annual income and a credit score between 670 and 739
This is a very common scenario. Which buyer has the most purchasing power for a new home?
$75K income, with different amount of savings for a down payment and debt
Many will see the question that comes up, which is better, to have less debt and a smaller down payment, or a larger down payment at the cost of having more debts.
Using our mortgage calculator in the Abodefy home search, we entered these different home buyer situations and assumed our illustrative buyer earns $75,000 per year.
Amazing! The buyer with no debt and the smallest down payment has the largest home purchase budget. Despite having $12,000 less for a down payment than buyer 4, they can afford to spend $132,000 more on their home purchase!
A budget of $260K like Buyer 1 gives you over 5000 possible listings in the Houston market, compared to ~1000 if your budget is $128,000.
Now that you know what you can afford, lets show you a few home options you can consider!
In case you want to go deeper, here are some of the key questions to have in mind to help you determine how much you can afford to pay for a new house.
Yearly Household Income Before Taxes: This is the money you earn from working.
Monthly Debt Payments: These are bills that count as debt including credit card payments, car loans, student loans, alimony, etc. Don't include bills like rent, utilities or food expenses here.
Down Payment: This is the cash you have saved in the bank to contribute to the purchase. A typical minimum down payment is 3.5% of the purchase price, and a maximum down payment is typically 20%. For a $300,000 property, that means a down payment between $10,500 and $60,000.
Many new home builders cover closing costs which allows you to stretch your down payment further.
Debt to Income Ratio: This is the ratio of all of your debts + a future mortgage payment compared to your income. Having a ratio in balance ensures you have enough money to live the rest of your life. A typical maximum debt to income ratio of 36% including the mortgage payment is what most mortgage companies will use.
Now that you understand the key terminology, let's look at a few realistic buyer situations to get a deeper understanding. For this exercise, we are using a buyer in the Houston, Texas area who wants to purchase a newly built home for lower maintenance costs and an included warranty.
Property tax rates around Houston are approximately 1.7% of the homes value.
Our budget will include Property Taxes, Home Owner's Insurance, PMI and HOA fees. Today interest rates are around 7.5% but many new home builders offer rate buy down programs that can help lower your payment.
Interest rates also vary based on your credit score, we used a score of 670 to 739 which is very common.
Example Scenarios:
Single Individual with an annual Income of $50,000, no debt, and $10,000 saved for a down payment
Home Purchase Budget: $174,854, or a monthly payment of $1,166.
Family with an annual income of $75,000 & a car payment of $250 per month, with a $15K down payment
Home Purchase Budget: $243,281 or a monthly payment of $1,596.
Family with an annual Income of $100,000 & student loans and some credit card debt totaling $600 per month. $25,000 saved for a down payment
Home Purchase Budget: $289,708 or a monthly payment of $1,850.
Here is a example of the mortgage calculator in action
This calculator is illustrative, but your unique situation will best be served by seeking out a purchase budget pre-approval from a reputable mortgage provider. First Choice Lending Group can provide you an approval within 48hrs.
Conroe Texas is the perfect place for your new family home, Come find out why and shop the latest listings
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