Can You REALLY Buy a $400,000 Home - for a $334 Month Payment?
Has anyone ever truly explained to you ‘why’ becoming Home Owner is so financially beneficial to you?
You’ve heard buying a home has “all these” financial benefits like appreciation
and tax deduction benefits, right? But “what are they” and how do they affect
your family’s financial situation, income & your monthly debts?
Can you really ‘afford’ a bigger house payment than your current rent?
The answer is YES!! You can’t believe how much financial benefit there is to
YOU when you actually BUY your home!!
As a matter of fact, I tell everyone that’s renting - you can BUY a beautiful
$400,000 home, and only pay about $334 a month for it – after ALL YOUR
TAX DEDUCTIONS every April 15th!!!
That’s CRAZY – right? There’s NO such thing as a $334 mortgage loan payment on a $400,000 home!! That’s funny!! You must be delusional Jeff. If that’s the case, we want to buy 3 houses with your help!!
I’m NOT CRAZY – and YES you can get a $334 house payment…
Let me explain the ENORMOUS financial benefit you get - when you BUY a home.
Check out the chart below which shows you the home prices and the actual full PITI mortgage loan payments, if you bought a home in many parts of the Denver Metro area. I used a FHA 30-year fixed rate 4.5 percent loan - and INSTEAD of the regular 3.5% Down Payment required of $14,000 on a $400,000 home, I used the $1,000 Down FHA loan (available if your gross annual income is less than $115,000.) FYI – every home will have different Property Taxes and Property Insurance, but the FHA Mortgage Insurance Premium will be accurate below.
On the $400,000 home example - I used information if you bought the home in Highlands Ranch, Parker or Castle Rock, which have annual HOA’s (Home Owners Association fees.) Notice the full PITI and HOA payment is $2,693/month total.
Loan Principle & Taxes/ Insurance/ FHA HOA/ P.I.T.I. TOTAL Est’d Monthly Income
Amount Interest month month M.I.P. month? Payment needed (31-40%) to Qualify
$300,000 $1,520 $100 $106 $213 - $1,940 $4,860-$6,260
$350,000 $1,774 $141 $106 $247 - $2,268 $5,670-$7,320
$400,000 $2,027 $159 $106 $283 $49 $2,693 $6,700-$8,600
$450,000 $2,280 $216 $106 $318 - $2,920 $7,300-$9,420
The last column is the Front-End Debt ratio – which is your gross monthly
income divided by 31% up to 40%. FHA rules allow you to have 31% of your
monthly income as your mortgage payment, if your credit scores are at 580.
So, on our $400,000 home example, you’d take the $2,693 PITI and divide it
by .31 = $8,600. Which means, you’d need $8,600 in monthly income to
qualify for that house payment worse-case scenario with low credit scores.
Or – if you have much higher credit scores & higher savings/401k amounts –
you’d be ‘rewarded’ with a 40% ratio. So, take $2,693 divided by .40 = $6,700.
Your family monthly gross income requirement DROPS by $1,900, which
means you can qualify for a larger house payment with better Credit Scores
& higher savings.
So – are you “okay” with everything on the chart? A $350,000 average home
in the Denver Metro area would have an approximate PITI full house payment
of $2,268/month – a $450,000 home would be about $2,693/month.
Explain the $334 House Payment!!!
Here’s my credentials first… Hi - I’m Jeff Boyce, and for the past 20 years (with $100+ Million Personally SOLD/Closed to home Buyers…not Sellers) – I’m the Denver Metro Realtor that specializes in helping renters & first-time home buyers to “fix their credit” - so I can help them BUY their beautiful homes! I enjoy finance work, and have an undergraduate degree from
The Ohio State University in Business, and a MBA in Business. I work 98% of my time specializing helping renters & first
time home buyers. Do you know what the “secret” to my success is? Well, I owned my mortgage company from 1998 to 2009 and learned from the top Industry Experts to became a professional credit repair specialist. For 20 years, I continue to help renters to LEGITIMATELY repair their old nagging credit issues - so they can BUY a beautiful home instead! I genuinely enjoy helping renters - and I take great pride in helping people who are “first time” home buyers!
The first thing we need to do, is to break down that $2,693 monthly
mortgage payment – and use the IRS Form 1040 and the Schedule A to
calculate your specific TAX DEDUCTIONS, to get to that $334 monthly
payment. I’m not sure how many of you “Itemize your Deductions” on your
taxes currently as renters, but as Home Owners – you will Itemize ALL your
allowable deductions!! Google the IRS 1040 and Schedule A for tax year
2019, and fill them both out – to “prove” to yourself a $334 house payment
Buying a house entitles you to “Itemize” and Write-Off these items: Interest
on your loan, Property Taxes, FHA Mortgage Insurance + plus an “added
bonus” of Writing Off your State of Colorado Income Tax, from your Federal
Income Tax owed!!
Here’s how it works…
Interest - the Interest on the $2,693 PITI payment is $17,868 total a year. (You need to Google “amortization table”: $400,000 loan, do a 4.5% interest rate, 30 year loan.) Your P & I is $2,027 a month - of which, about $538 is Principle and about $1,489 is Interest (take $1,489 x 12 months = $17,868.)
You will enter $17,868 in Line 8a, Schedule A - Home Mortgage Interest and Points.
FHA MIP (Mortgage Insurance Premiums) - you are allowed to deduct BOTH the Upfront FHA MIP and the Monthly MIP payments. On a $400,000 loan – the Monthly MIP was $283/month x 12 = $3,396. The Upfront MIP is $7,000 on a $400,000 loan, but divided by 7 year term = $1,000/year. So - you have $3,396 + $1,000 = $4,396 total that goes on the Schedule A, Line 8a, from the Form 1098 your mortgage lender will send you!
Property Taxes - you are allowed to deduct the Property Taxes on your home, which were $159/month x 12 = $1,908. You put $1,908 on Line 6, Schedule A.
BONUS “Itemization” Deduction - because you now “Itemize” your
deductions, you are allowed to “Write-Off” your State of Colorado Personal
Income Tax. The maximum annual household income on the $1,000
Down FHA loan is $115,000, we’ll use a lower household income. So,
on Colorado income taxes you take 4.63% of $90,000 income = $4,167.
We put that $4,167 amount as your deduction on Line 5a, Schedule A.
So, here are the amounts you’ll deduct - $17,868 + $4,396 + $1,908 +
$4,167 = $28,312 in TOTAL WRITE-OFF’s buying your home.
Take $28,312 and it goes to Line 8, page 2, of the 1040 Form – “Itemized
Deductions”. That’s the MASSIVE Tax Deduction and financial benefit you
get for buying a $400,000 home!! But it gets better…
Let’s compare that $2,693 monthly PITI house payment - to the ACTUAL Tax Benefit you get. So, take $28,312 and divide it by 12 months = $2,359. WOW!!! That’s enormous!!!
Now – your house payment is $2,693, so we subtract your actual tax benefit of $2,359 = $334 net house payment.
That $2,359 is REAL MONEY – not smoke & mirrors – or hocus pocus! You can go to your employers and CHANGE your W-4 Employee’s Withholding Allowance Certificate. You and your spouse can divide up equally that $2,359 per month allowance – and you EACH get to “take home” an additional $1,179 per month!!! ($2,359 divided 2 = $1,179.)
How can that be? How is it possible a $2,693 monthly house payment –
truly nets a $334 house payment, when you “Itemize” and deduct ALL your
It seems ILLEGAL!!!
Jeff, surely you’re CRAZY – and are doing something wrong here?
But, it’s NOT wrong or illegal!!
You’re going to get a MASSIVE $28,312 tax deduction every year as a
home owner!! You’ll get a $28,312 check BACK from the IRS, if you DON’T
change your W-4’s!!!
Compare that to Renting vs Buying a $400,000 home. If you're paying $2,000/month for rent - you're spending $24,000 in rent a year! Is there any “reason” you can tell me, that you want to keep renting? So – since Credit Report problems are the #1 reason ‘why’ so many families pay rent - when they could be “home buying” instead, call me at 303-622-5700, and let’s talk about your specific financial and credit report situation!
Let’s get GOING on getting you “Pre-Approved” too – being a Home Owner is awesome!! Oh, and don’t forget, your $400,000 home will appreciate about 10% a year too (That’s the average for nicer neighborhoods the past 4 years.) You could use another $40,000 or so in appreciation & home equity - right?!
Call, text or email me now – and let’s talk about YOUR specific renting/home
buying situation – and turn YOU into a Home Owner, instead of a frustrated
“$100+ Million Personally SOLD/Closed Since 1998”