Saturday, September 18, 2010  “How Much Income Do I Need to Buy
a House in Santa Barbara?”  Here’s my “rule of thumb”: People
can qualify for a loan which is between 4 and 5 times their
gross income. I’ve been doing loans for almost 20 years and I
use this simple formula throughout the day. It’s really easy. No
silly 40% income-to-debt ratios. No PITI calculations!  Here’s
an example:  Let’s assume you have 2 people earning $45,000/year
each ($90,000 total). The maximum mortgage would be 4.5 X
$90,000 = $405,000! There, that’s it. Wasn’t that easy?  At this
stage, you simply put the amount of money that you’ve saved
(yes, you need to save money!) on top of this loan amount and
you’ll have the approximate purchase price. So, let’s assume you
have $45,000 for the downpayment, here are the numbers:  4.5 X
$90,000 = $405,000 + $45,000 = New home price of $450,000.  Now,
there are a many variables which will make the above formula NOT
work. High credit card debt, numerous educational loans and car
loans are exampl