If I have $40,000 for a down payment and can afford $1,800 monthly for
a mortgage (30-year fixed at 6%, let's say), how much house can I
afford?

I did $40,000 + ($1,800 x 12 x 30) = $688,000, but this seems to simplistic.

(If necessary to take property tax and insurance into account, let's
say Bay Ridge, Brooklyn, N.Y., U.S.A)

Thank you.

Hello nelson-ga,

I?m going to go with $340,000 as what you can afford (maximum) based
off your information. Most mortgage lenders figure in taxes and
insurance into the mortgage, so the final answer from your bank may be
less than what I have here. I can?t give you a definite with those
included because they?re company specific on rates (insurance).

If the house price is $340,000.00 and you put down a payment of
$40,000.00 that takes the total loan down to $300,000.00

Using a mortgage calculator on a 30 year loan at 6.00% interest, that
would make your payments 1798.65.

Reading the amortization schedule would go like this. 

If you bought the house this month, you?d have it like this:
For 2005 : Int=$ 7484.99 Prin=$ 1508.27 Bal=$ 298491.73
For 2006 : Int=$ 17806.76 Prin=$ 3777.06 Bal=$ 294714.67
For 2007 : Int=$ 17573.80 Prin=$ 4010.02 Bal=$ 290704.65
For 2008 : Int=$ 17326.47 Prin=$ 4257.35 Bal=$ 286447.30
For 2009 : Int=$ 17063.88 Prin=$ 4519.94 Bal=$ 281927.36
For 2010 : Int=$ 16785.10 Prin=$ 4798.72 Bal=$ 277128.65
For 2011 : Int=$ 16489.13 Prin=$ 5094.69 Bal=$ 272033.96
For 2012 : Int=$ 16174.90 Prin=$ 5408.92 Bal=$ 266625.04
For 2013 : Int=$ 15841.29 Prin=$ 5742.53 Bal=$ 260882.51
For 2014 : Int=$ 15487.10 Prin=$ 6096.72 Bal=$ 254785.79
For 2015 : Int=$ 15111.07 Prin=$ 6472.75 Bal=$ 248313.04
For 2016 : Int=$ 14711.85 Prin=$ 6871.97 Bal=$ 241441.07
For 2017 : Int=$ 14288.00 Prin=$ 7295.82 Bal=$ 234145.25
For 2018 : Int=$ 13838.01 Prin=$ 7745.81 Bal=$ 226399.43
For 2019 : Int=$ 13360.26 Prin=$ 8223.56 Bal=$ 218175.88
For 2020 : Int=$ 12853.05 Prin=$ 8730.77 Bal=$ 209445.11
For 2021 : Int=$ 12314.56 Prin=$ 9269.26 Bal=$ 200175.85
For 2022 : Int=$ 11742.85 Prin=$ 9840.97 Bal=$ 190334.88
For 2023 : Int=$ 11135.88 Prin=$ 10447.94 Bal=$ 179886.94
For 2024 : Int=$ 10491.47 Prin=$ 11092.35 Bal=$ 168794.59
For 2025 : Int=$ 9807.32 Prin=$ 11776.50 Bal=$ 157018.09
For 2026 : Int=$ 9080.97 Prin=$ 12502.85 Bal=$ 144515.25
For 2027 : Int=$ 8309.82 Prin=$ 13273.99 Bal=$ 131241.25
For 2028 : Int=$ 7491.11 Prin=$ 14092.71 Bal=$ 117148.55
For 2029 : Int=$ 6621.91 Prin=$ 14961.91 Bal=$ 102186.63
For 2030 : Int=$ 5699.09 Prin=$ 15884.73 Bal=$ 86301.90
For 2031 : Int=$ 4719.35 Prin=$ 16864.47 Bal=$ 69437.44
For 2032 : Int=$ 3679.19 Prin=$ 17904.63 Bal=$ 51532.81
For 2033 : Int=$ 2574.87 Prin=$ 19008.95 Bal=$ 32523.86
For 2034 : Int=$ 1402.44 Prin=$ 20181.38 Bal=$ 12342.48
For 2035 : Int=$ 248.08 Prin=$ 12342.48 Bal=$ -0.00

Your total interest would be $347,514.57 plus the $300,000.00 for the
house balance, plus the $40,000.00 down = your total cost of
$647,554.57.
http://www.mortgagecalc.com/cgi-bin/mortold.pl?prin=300000&int=6.00&term=30&strt=Aug&stry=2005&full=Yes&ppay=0&apay=0&pay1=&ppno=0&outt=HTML+3.0+Tables

I would say go with a $250,000.00, put $40,000.00 down and call it
good. It should be at about your payment range and whatnot when you
figure in taxes and insurance.


If this answer requires further explanation, please request
clarification before rating it, and I'll be happy to look into this
further.

Nenna-GA
Google Answers Researcher

Thank you, Nenna.  That clears it up.  (I thought I was missing
something in my calculation.  Darned bank wanting to make a profit.)

Keep in mind that the $688,000 number you came up with is actually the
total amount you end up paying the bank after 30 years.  The actual
amount of the loan you take out will be about $300,000.

$300,000 financed at %6 will require payments of $1,798.65 a month.

There are a couple mortage calculators out there.  Just do a search
for mortgage calculator and you'll see a bunch.  Several of the
calculators even have links that show you just how much you can afford
based on current income and other variables.

Best of luck!

Nelson,

This may be of interest to you:

http://www.mortgagecontent.net/scApplication/fanniemae/affordability.do

This site has a number of good mortage calculators.
http://www.mortgagecalc.com/

Keep in mind that the finance company may not agree with you regarding
how much you can afford per month.

- Hammer

Thanks to all who commented.  I appreciate your help.

Here in Germany, a bank probably would not go under 20% downpayment,
but I assume one of you would have considered that if the situation in
the States were similar.