I’ve noticed in some comments that I’ve gotten on my blog about some of the down payment assistance programs that I work with and how it would be impossible to find a livable house if that is what your income is.

You can.  No, you are not buying a 4 bedroom 3 bath colonial on a golf course, but that doesn’t mean all you can afford is a shack in a neighborhood where you worry about walking from your car to your house.

Let’s do the math here:
We are going to assume a single person making $40,000 a year and taking advantage of the Baltimore County MALP program.  The program allows for your housing payment to be no more 31% of your pre-tax income.  That would be $1033.

Then….let’s take a house that is $175,000.  If you qualify for the MALP program, you’d also qualify for the FHLB grant I’ve talked so much about on here.  That means you could have $35,000 for a down payment and $10,000 for closing costs.  You’d also need about $2000 from your own pocket, so your down payment is really $37,000.  This gives you a loan amount of $138,000. 

With a 5.75% interest rate (because you can pay a point or 2 since you have so much money for closing costs), the principal and interest payment would be $817.41.  Taxes for said property are $1800 a year which come out to $150/month, let’s estimate a high home owner’s insurance rate of $50/month.  This puts the total payment at $1017.41.  Did you notice what was missing?  There’s no mortgage insurance because you have more than a 20% down payment. 

And there ARE plenty of houses in Baltimore County in the $175,000 price range.  Especially now, when it is a buyer’s market.

What you can’t have is a $500 car payment, $300 credit card payments, or lots of other debt.  This will then make your total debt to income ratio too high and is what I see stopping a lot of people from being able to afford a house.

So this example is just to show you, don’t think you can’t be a home owner because you don’t make a lot of money!  You can do it and home ownership can really put you in a better financial position.