Income, Payments for Buying $150,000 Home

How much would it cost you each month if you bought a $150,000 home? How much would you have to earn to qualify for the loan? How much money will you have to use as a down-payment?

There are no hard-and-fast answers to these questions. They depend on a variety of factors, including what type of loan you choose, which lender you’re working with and the interest rate that you’ll be charged.

The Times asked lending experts at the California Assn. of Realtors to calculate the loan requirements for two hypothetical buyers of a $150,000 home. One buyer is making a 10% down-payment of $15,000, and the other is making a 20% down payment of $30,000.

If the figures below make it seem as though a home is out of your reach, don’t despair. The realtors used relatively strict lending guidelines followed by some financial institutions. Some lenders won’t require you to meet such rigorous standards, so it pays to shop around for a loan if the first few lenders turn you down.

Also remember that you may qualify for loan programs run by the Federal Housing Administration, California Housing Finance Agency, Veterans Administration or similar agencies. They generally require borrowers to make smaller down payments and have looser financial requirements than traditional lenders.

One other note: You’ll notice in the following examples that buyers looking for an adjustable-rate mortgage instead of a fixed-rate loan usually don’t have to earn as much. That’s because the ARM’s low introductory rate makes it easier to qualify for the money.

A buyer who makes a 10% down payment of $15,000 on a $150,000 home and wants a fixed-rate loan at the current rate of 10% would have to earn about $56,296 annually, according to CAR. The monthly payment for principal, interest, taxes and insurance would total about $1,407.

If that same buyer wanted an adjustable-rate loan with an introductory rate of 8.3%, he or she would have to earn much less--$47,658 annually--to qualify for the loan. The initial monthly payment would be just $1,191, although it would rise as soon as the loan rate was adjusted upward in six or 12 months.

That same buyer could also probably find a so-called “graduated-payment mortgage,” or GPM, that would start at about 9 3/4%, rise to 10 3/4% in the second year, and go to 11 3/4% for the remainder of the 30-year term. If so, the borrower would need to earn $53,294 and the initial monthly payment would be $1,330.

A buyer who purchased a $150,000 home with a 20% down payment of $30,000 and wanted a fixed-rate loan at the current rate of 10% would have to earn about $50,897, according to the realty experts. Monthly payments would be $1,270.

If the buyer was seeking an adjustable-rate loan with an introductory rate of 8.3%, an income of $43,130 would be required and the initial monthly payment would be $1,078.

To get a graduated-payment mortgage with an initial rate of 9 3/4%, the borrower would need to earn $48,139 annually and the first monthly payments would be $1,203.