Qualifying income for $1m – quaint?

[hugo]

I’m relatively new to SD and still amazed how little people seem to expect for $1,000,000. That price will get you a POS along the coast, something a little better in CV. I ran a mortgage qualifier program to see if I too could afford a $1,000,000 POS. If you have 200k to put down, assume 1% property tax, 2k/month cc payments, get a 6.25% 30yr fixed (I know, too low) then to qualify your annual income should be $282,525 or more.

The good news – I don’t qualify to spend $1,000k on a POS. Okay, who is keeping the floor under the coastal market? It’s a small slice of the population earning over 282k. Are buyers putting down more than 20%? The “move-up” buyers are going to dry up as inland prices drop and sellers lose imagined equity.

——
From the Mortgage Qualifer calculator:
Qualify Calculation
The $6,176 monthly payment you could qualify for is calculated by taking the lower of these two calculations:

1. Monthly Income X 28% = monthly PITI $23,544 X 28% = $6,592
2. Monthly Income X 36% – Other loan payments = monthly PITI

[Eugene]

First of all, I’m getting $247k qualifying income based on front debt-to-income ratio of 28%. I don’t see why someone with $200k in the bank would have 2k/month credit card payments.

Second of all, private lenders are not bound by 28%/36% DTI ratios, these only apply to government backed loans (which you won’t be getting anyway because your mortgage is above 417k). As far as I know, pre-credit crunch, lenders were often willing to make mortgages with DTI ratios as high as 45%. I’m not sure what the situation is today.

Finally, there are more rich folks than coastal houses around here. There are roughly 30k houses in the county north of 52 and west of 5. Compare with 100k families with liquid net worth above $1m and 50k families with gross annual incomes above 200k.

[Eugene]

First of all, I’m getting $247k qualifying income based on front debt-to-income ratio of 28%. I don’t see why someone with $200k in the bank would have 2k/month credit card payments.

Second of all, private lenders are not bound by 28%/36% DTI ratios, these only apply to government backed loans (which you won’t be getting anyway because your mortgage is above 417k). As far as I know, pre-credit crunch, lenders were often willing to make mortgages with DTI ratios as high as 45%. I’m not sure what the situation is today.

Finally, there are more rich folks than coastal houses around here. There are roughly 30k houses in the county north of 52 and west of 5. Compare with 100k families with liquid net worth above $1m and 50k families with gross annual incomes above 200k.

[Eugene]

First of all, I’m getting $247k qualifying income based on front debt-to-income ratio of 28%. I don’t see why someone with $200k in the bank would have 2k/month credit card payments.

Second of all, private lenders are not bound by 28%/36% DTI ratios, these only apply to government backed loans (which you won’t be getting anyway because your mortgage is above 417k). As far as I know, pre-credit crunch, lenders were often willing to make mortgages with DTI ratios as high as 45%. I’m not sure what the situation is today.

Finally, there are more rich folks than coastal houses around here. There are roughly 30k houses in the county north of 52 and west of 5. Compare with 100k families with liquid net worth above $1m and 50k families with gross annual incomes above 200k.

[Eugene]

First of all, I’m getting $247k qualifying income based on front debt-to-income ratio of 28%. I don’t see why someone with $200k in the bank would have 2k/month credit card payments.

Second of all, private lenders are not bound by 28%/36% DTI ratios, these only apply to government backed loans (which you won’t be getting anyway because your mortgage is above 417k). As far as I know, pre-credit crunch, lenders were often willing to make mortgages with DTI ratios as high as 45%. I’m not sure what the situation is today.

Finally, there are more rich folks than coastal houses around here. There are roughly 30k houses in the county north of 52 and west of 5. Compare with 100k families with liquid net worth above $1m and 50k families with gross annual incomes above 200k.

[raptorduck]

Maybe this will make you feel better. Up here in the Bay Area, $1 million will get you 2,500 sf 4BR tract house on 4k sf lot in San Jose, or 1,200 sf 60 yr old ranch home on 6k sf lot in Mountain View, or nothing in Los Altos, not even a bare 4k sf vacant lot. And we are in a “down” market here as well.

[raptorduck]

Maybe this will make you feel better. Up here in the Bay Area, $1 million will get you 2,500 sf 4BR tract house on 4k sf lot in San Jose, or 1,200 sf 60 yr old ranch home on 6k sf lot in Mountain View, or nothing in Los Altos, not even a bare 4k sf vacant lot. And we are in a “down” market here as well.

[raptorduck]

Maybe this will make you feel better. Up here in the Bay Area, $1 million will get you 2,500 sf 4BR tract house on 4k sf lot in San Jose, or 1,200 sf 60 yr old ranch home on 6k sf lot in Mountain View, or nothing in Los Altos, not even a bare 4k sf vacant lot. And we are in a “down” market here as well.

[raptorduck]

Maybe this will make you feel better. Up here in the Bay Area, $1 million will get you 2,500 sf 4BR tract house on 4k sf lot in San Jose, or 1,200 sf 60 yr old ranch home on 6k sf lot in Mountain View, or nothing in Los Altos, not even a bare 4k sf vacant lot. And we are in a “down” market here as well.

[Alex_angel]

What youa re saying is complete common sense, yet for some reason it doesn’t seem that way. People are still trying to outbid each other on homes, sales are still happening on over million dollar homes. What seems to be happening is that those who can’t afford are getting pushed out of SD and those who can are moving in. There was a stat that the population of SD is declining, but in reality it is just people that can’t afford to live here that are moving away.

[Alex_angel]

What youa re saying is complete common sense, yet for some reason it doesn’t seem that way. People are still trying to outbid each other on homes, sales are still happening on over million dollar homes. What seems to be happening is that those who can’t afford are getting pushed out of SD and those who can are moving in. There was a stat that the population of SD is declining, but in reality it is just people that can’t afford to live here that are moving away.

[Alex_angel]

What youa re saying is complete common sense, yet for some reason it doesn’t seem that way. People are still trying to outbid each other on homes, sales are still happening on over million dollar homes. What seems to be happening is that those who can’t afford are getting pushed out of SD and those who can are moving in. There was a stat that the population of SD is declining, but in reality it is just people that can’t afford to live here that are moving away.

[Alex_angel]

What youa re saying is complete common sense, yet for some reason it doesn’t seem that way. People are still trying to outbid each other on homes, sales are still happening on over million dollar homes. What seems to be happening is that those who can’t afford are getting pushed out of SD and those who can are moving in. There was a stat that the population of SD is declining, but in reality it is just people that can’t afford to live here that are moving away.

[kev374]

as far as I can see, the top end of the market is experiencing the most price drops at least here in South Orange County. I have seen $1.2 million houses purchased in 2005 listed now for a loss at $900k. A lot of speculators in that market as well. The top end is getting hammered just like the lower tiers.

As for the statistic about so many buyers for top end homes, using that view is erroneous. I would bet that MOST people with $1 mil. liquid net worth are already homeowners and not creating any significant new demand.

[kev374]

as far as I can see, the top end of the market is experiencing the most price drops at least here in South Orange County. I have seen $1.2 million houses purchased in 2005 listed now for a loss at $900k. A lot of speculators in that market as well. The top end is getting hammered just like the lower tiers.

As for the statistic about so many buyers for top end homes, using that view is erroneous. I would bet that MOST people with $1 mil. liquid net worth are already homeowners and not creating any significant new demand.

[Author]

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