How does everyone afford a house?

[alkemyst]

Originally posted by: Qacer
A good friend is wanting to buy a house. He makes about 65k/year. I told him that he should use various online calculators such as Fannie Mae's to find out how much he can afford. Out of curiosity, I typed it 65k into this calculator and just assumed certain values (~$900 for car, student loan, etc.) for the other fields. For a conventional loan, it shows that he can get a max loan of $136k and he needs about $30k for down payment & closing costs. This translates to about a $160k house.

I know for a fact that he doesn't have $30k because his broke @ss is still too cheap to buy me lunch even though I paid for his lunches back in school. Plus, he said so himself.

Anyway, I think a $160k house will probably get someone from Tampa an old tent located in the ghetto. Most of the decent houses being listed right now run for about $220k to $260k.

Now, I understand his question about how certain folks can afford a house. Some of the people that we hang out with do not make $65k/yr, but somehow, they were able to buy a decent house in a nice neighborhood.

What's the trick here?

I was going to suggest to him 100% financing with no down-payment thru Wachovia, but I haven't done enough reading to find out the cons.

There is no trick, many cannot afford homes.

Many that get into homes (less so now) were picking products with insane 1% interest only rates that are now adjusting to the full index. Some thought they would sell and make a fortune, others thought they'd somehow get huge raises, and quite a few are speculating that the government will step in and subsidize them.

On about $75k I can afford a $265k home and have over $1k left over. This includes normal bills but no car payments. I do have $125 to school loans each month and about $200 to credit cards.

If you are buying cars that approach $1k/month then it makes it a lot harder to buy a home. $1000 in mortage is more than $100k of house in most areas, even in tax/insurance heavy florida every $1000 is about $125k of home.

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