How much income do I need to buy a $400,000 house in Minnesota

How much income do I need to buy a $400,000 house in Minnesota

Take note of financing options for both FHA & Conventional @ 3.5%, 10%, & 20% down payments. With ever changing interest rates, please use this as a guide for how monthly payments are determined and rough estimtates.

3.5% down payment FHA

To determine how much income you need to afford a $400,000 home in Minnesota with a 3.5% down payment, a 7% interest rate, and including closing costs, we'll follow these steps:

Down Payment: A 3.5% down payment on a $400,000 home would be $14,000.

Mortgage Loan Amount: Subtract the down payment from the home price to find the mortgage loan amount: $400,000 - $14,000 = $386,000

Closing Costs: Closing costs typically range from 2% to 5% of the home's purchase price. For this estimate, let's use 3% of the home's purchase price: Closing costs = 3% of $400,000 = 0.03 * $400,000 = $12,000

Total Cash Needed: In addition to the down payment, you'll need to cover the closing costs:

Total cash needed = Down payment + Closing costs = $14,000 + $12,000 = $26,000

Mortgage Loan Amount After Closing Costs: Deduct the closing costs from the original loan amount to find the adjusted loan amount:

Adjusted loan amount = Mortgage loan amount - Closing costs = $386,000 - $12,000 = $374,000

Monthly Mortgage Payment: Use a mortgage calculator to find the monthly mortgage payment based on the adjusted loan amount, interest rate, and loan term: For a 30-year fixed-rate mortgage at 7%, the monthly payment on a $374,000 loan would be approximately $2,486.

Property Taxes and Insurance: Use the same estimates as before: property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

Property taxes: 1.25% of $400,000 is $5,000 per year or approximately $417 per month.

Homeowners insurance: $1,000 annually or approximately $83 per month.

Total Monthly Payment: Add the mortgage payment, property taxes, and homeowners insurance:

Total monthly payment = Mortgage payment + Property taxes + Homeowners insurance = $2,486 + $417 + $83 = $2,986

Debt-to-Income Ratio (DTI): To determine the income needed to afford this monthly payment, we'll use a conservative DTI of 28%.

Monthly income needed = Total monthly payment / DTI = $2,986 / 0.28 ≈ $10,664

So, you would ideally need a monthly income of around $10,664 to afford a $400,000 home in Minnesota with a 3.5% down payment, a 7% interest rate, and including closing costs, assuming property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

10% down payment Conventional

To calculate how much income you would need to afford a $400,000 home in Minnesota with a 10% down payment, a 7% interest rate, and including closing costs, we'll follow these steps:

Down Payment: A 10% down payment on a $400,000 home would be $40,000.

Mortgage Loan Amount: Subtract the down payment from the home price to find the mortgage loan amount: $400,000 - $40,000 = $360,000

Closing Costs: Closing costs typically range from 2% to 5% of the home's purchase price. For this estimate, let's use 3% of the home's purchase price: Closing costs = 3% of $400,000 = 0.03 * $400,000 = $12,000

Total Cash Needed: In addition to the down payment, you'll need to cover the closing costs: Total cash needed = Down payment + Closing costs = $40,000 + $12,000 = $52,000

Mortgage Loan Amount After Closing Costs: Deduct the closing costs from the original loan amount to find the adjusted loan amount: Adjusted loan amount = Mortgage loan amount - Closing costs = $360,000 - $12,000 = $348,000

Monthly Mortgage Payment: Use a mortgage calculator to find the monthly mortgage payment based on the adjusted loan amount, interest rate, and loan term: For a 30-year fixed-rate mortgage at 7%, the monthly payment on a $348,000 loan would be approximately $2,316.

Property Taxes and Insurance: Use the same estimates as before: property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

Property taxes: 1.25% of $400,000 is $5,000 per year or approximately $417 per month.

Homeowners insurance: $1,000 annually or approximately $83 per month.

Total Monthly Payment: Add the mortgage payment, property taxes, and homeowners insurance: Total monthly payment = Mortgage payment + Property taxes + Homeowners insurance = $2,316 + $417 + $83 = $2,816

Debt-to-Income Ratio (DTI): To determine the income needed to afford this monthly payment, we'll use a conservative DTI of 28%.

Monthly income needed = Total monthly payment / DTI = $2,816 / 0.28 ≈ $10,057

So, you would ideally need a monthly income of around $10,057 to afford a $400,000 home in Minnesota with a 10% down payment, a 7% interest rate, and including closing costs, assuming property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

20% down payment Conventional

To calculate how much income you would need to afford a $400,000 home in Minnesota with a 20% down payment, a 7% interest rate, and including closing costs, we'll follow these steps:

Down Payment: A 20% down payment on a $400,000 home would be $80,000.

Mortgage Loan Amount: Subtract the down payment from the home price to find the mortgage loan amount: $400,000 - $80,000 = $320,000

Closing Costs: Closing costs typically range from 2% to 5% of the home's purchase price. For this estimate, let's use 3% of the home's purchase price: Closing costs = 3% of $400,000 = 0.03 * $400,000 = $12,000

Total Cash Needed: In addition to the down payment, you'll need to cover the closing costs: Total cash needed = Down payment + Closing costs = $80,000 + $12,000 = $92,000

Mortgage Loan Amount After Closing Costs: Deduct the closing costs from the original loan amount to find the adjusted loan amount: Adjusted loan amount = Mortgage loan amount - Closing costs = $320,000 - $12,000 = $308,000 Monthly Mortgage Payment: Use a mortgage calculator to find the monthly mortgage payment based on the adjusted loan amount, interest rate, and loan term: For a 30-year fixed-rate mortgage at 7%, the monthly payment on a $308,000 loan would be approximately $2,052.

Property Taxes and Insurance: Use the same estimates as before: property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

Property taxes: 1.25% of $400,000 is $5,000 per year or approximately $417 per month. Homeowners insurance: $1,000 annually or approximately $83 per month.

Total Monthly Payment: Add the mortgage payment, property taxes, and homeowners insurance: Total monthly payment = Mortgage payment + Property taxes + Homeowners insurance = $2,052 + $417 + $83 = $2,552

Debt-to-Income Ratio (DTI): To determine the income needed to afford this monthly payment, we'll use a conservative DTI of 28%. Monthly income needed = Total monthly payment / DTI = $2,552 / 0.28 ≈ $9,114

So, you would ideally need a monthly income of around $9,114 to afford a $400,000 home in Minnesota with a 20% down payment, a 7% interest rate, and including closing costs, assuming property taxes at 1.25% of the home's value per year and homeowners insurance at $1,000 annually.

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