How Much House Can I Afford on $100,000 a Year in San Diego?

The short answer

On $100,000 of gross household income, a lender holding you to a 43% debt-to-income ratio lets about $3,583 a month go to housing. That budget has to cover the loan payment, mortgage insurance, property tax and homeowners insurance together. Spent in full, it buys roughly $550,000 with a conventional loan and 20% down, $460,000 with a VA loan and nothing down, or $445,000 with FHA and 3.5% down.

The conventional figure is the highest because a 20% down payment shrinks the loan and removes mortgage insurance. It also needs the most cash: $121,000 at closing, against $9,200 for VA and $24,475 for FHA.

At a 43% debt-to-income ratio

43% was the original Qualified Mortgage limit, and many lenders still use it as their standard ceiling.

Monthly housing is principal, interest, mortgage insurance, property tax and homeowners insurance.

At a 50% debt-to-income ratio

Fannie Mae's automated underwriting allows up to 50%; manual underwriting stops at 36%, or 45% with strong credit or reserves. It buys more house and leaves less room in the budget.

Monthly housing is principal, interest, mortgage insurance, property tax and homeowners insurance.

What lowers the number

The figures above assume the whole budget goes to the house. Anything else a lender counts comes out of the same budget, dollar for dollar:

• HOA dues. Common on condos and in newer communities.
• Mello-Roos. A flat special tax, set by formula rather than by the home's value, in many newer San Diego communities, often a few hundred dollars a month. See what Mello-Roos is.
• Other debt payments. Car loans, student loans and card minimums count against the same 43%.

On $100,000, each $100 a month of these lowers the price you can afford by roughly $15,000 on a conventional loan, $13,000 on VA and $13,000 on FHA. A $300 Mello-Roos bill therefore costs about three times those amounts.

What these figures assume

• 30-year fixed rates of 6.50% conventional, 6.375% FHA and 6.25% VA, the site's reference rates as of this writing. They are illustrations, not a quote, and your lender's rate will differ.
• Property tax at 1.20% of the price a year: the 1% base rate plus voter-approved bonds, at the high end of the county's usual range so the figures err low. Homeowners insurance at $42 a month per $100,000 of price.
• FHA mortgage insurance per HUD's schedule, with the 1.75% upfront premium financed. A first-use VA funding fee, also financed.
• FHA stops at the San Diego County loan limit of $1,104,000.
• Closing costs at 2% of the price, included in cash to close.
• Prices are rounded down to the nearest $5,000.

These are planning estimates rather than a pre-approval. A lender looks at your credit, assets and the specific property, and the real tax bill depends on the address. For a property you are looking at, the free report pulls the actual tax rate and Mello-Roos for that parcel. The income needed for a $1M home works the same question in reverse.