Ep.16 - Home-Buying in LA: $60k Edition
Being a homeowner in LA on a $60k/yr salary is improbable, but NOT impossible! The only way to make it happen is to be meticulously strategic on getting all aspects of your finances in order. To be exact, you need to have a good credit score, some savings, and minimum debt.
Here is everything you need to know.
HOUSE OR CONDO?
You are limited to condos only. Plain and simple.
HOW MUCH CAN I AFFORD?
Less than $250k. If you have a lot of savings, then add the amount of savings on top of that. For example, if you have $50k in savings to spend on a home, you can afford a condo up to $300k ($250k + $50k).
YOUR BEST MORTGAGE PROGRAM
The best program is the 1% down from Quicken Loan. It is a special program that has the same guideline as the 3% conventional loan, except Quicken Loan helps out with 2% down payment in kind. You can read all about it here. Is there a catch? Yes! In order to qualify, your income needs to be below the county median income. Luckily for you, as a person who makes $60k/yr, you made the cut, because that number is $64,300 in LA.
680 and above.
MAX MONTHLY DEBT ALLOWED?
$2250 (45% of your income). That is the total amount of all your debt, including your mortgage, credit cards, student loans and car loans. So if your mortgage plus existing debt adds up to more than $2250 a month, then you won't be able to buy a house.
HOW MUCH CASH DO YOU NEED?
1% down + 3% closing costs. On a house of $250k, you should save at least $10k. Sometimes your closing costs could be lower, because you can get a rebate from the lender for taking a higher interest rate. But you shouldn't count on it, as it is rarely worth it in the long run.
HOW MUCH EXISTING DEBT CAN I HAVE?
You should have close to zero debt. But, if you're a typical millennial in LA, that's highly unlikely. Realistically, you need to have less than $300 in monthly debt (including credit card, student loan, car loan).
WHERE CAN I FIND THESE HOMES?
South LA (look west of Crenshaw), Inglewood, Gardena, and the Valley.
LET'S FIND SOME REAL EXAMPLES! (click on the picture for more detail)
CONDO #1 - Baldwin Village (South LA)
Address: 4060 Ursula Ave #13, Los Angeles, CA 90008
Home Price: $200k
Monthly Payment: $1,695
CONDO #2 - Inglewood
Address: 512 Evergreen St #207, Inglewood, CA 90302
Home Price: $269k
Monthly Payment: $2,059
CONDO #3 - The Valley
Address: 18530 Hatteras St #221, Tarzana, CA 91356
Home Price: $199k
Monthly Payment: $1,615
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