I didn’t mention SFR because there’s no SFR in MM for around $150k and there are none in Clairemont as well.[/quote]
I understand, AN. The OP wasn’t entirely clear on their price range for a purchase (the best thing to do is to tell them to get prequalified). He all but stated they have no problem paying $1300 mo rent and like their current location (92117). The current 30 yr fixed FHA rate is currently about 3.5% with a one-point origination fee and a 1.75% up-front MIP payment (under the new guidelines). Under the 203b program, the monthly payments will be as follows:
For a $150K purchase (likely condo):
DP $5250, Orig fee $1447.50, up-front MIP $2533.13
97.5% P&I for $144,750 mtg: $660.06
Est mo taxes for City of SD (urban): $146.25
Contents ins premium: $33.20
1.25% MIP: 150.78
HOA dues: $250-$300 Total mo pymt: $1240.29 to $1290.49
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For a $200K purchase (likely small house):
DP $7000, Orig fee $1930.00, up-front MIP $3377.50
97.5% P&I for $193,000 mtg: $880.08
Est monthly taxes for City of SD (urban): $195.00
Homeowner’s ins premium: $62.76
1.25% MIP: 201.04 Total mo pymt: $1338.88
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For a $250K purchase (larger 2-3 bdrm house)
DP $8750, Orig fee $2412.50, up-front MIP $4221.88
97.5% P&I for $241.250 mtg: $1100.10
Est monthly taxes for City of SD (urban): $210.77
Homeowner’s ins premium: $78.45
1.25% MIP: 251.30 Total mo pymt: $1640.62
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If they were able to go conventional (had a 20% down payment), they could save themselves thousands per year on monthly MIP premiums and avoid the hefty up-front MIP payment as well as the 1% origination fee and thus get far more house for the money (due to borrowing a lower amount and having a lower interest rate).
As it currently stands (with FHA financing), the smallish house that could be purchased for $195K to $205K (they’re out there, folks, and some are on larger lots) seems like the best bet for them to have mo mortgage payments in line with their current rent, IMHO. This would be better to live in with a baby than to share walls with partying singles and/or transient tenants and they wouldn’t grow out of it as quickly. If they did, they could consider a room addition in lieu of trying to again qualify for a new, larger mortgage on another house in the coming years.
Just ONE rent increase in the coming months could make their case for homeownership!
