Apache is functioning normally
Mortgage rates dropped to 6.74%, on average for 30-year mortgages. (iStock)
Mortgage rates dropped to 6.74%, on average for 30-year mortgages. (iStock)
Mortgage interest rates on the 15-year and 30-year mortgages are down from last week, Freddie Mac reported.
“The 30-year fixed-rate mortgage decreased again this week, with declines totaling almost a quarter of a percent in two weeks’ time,” Freddie Mac Chief Economist Sam Khater said.
For 30-year, fixed-rate mortgages, the average interest rate was 6.74% this week, a decent drop from last week when rates averaged 6.88%. Rates aren’t down quite as much as last year when they were 6.6%, on average.
Additionally, 15-year mortgages averaged 6.16%, down slightly from last week when they averaged 6.22%. These mortgages also aren’t as low as last year when they averaged 5.9%.
“Despite the recent dip, mortgage rates remain high as the market contends with the pressure of sticky inflation,” Khater said. “In this environment, there is a good possibility that rates will stay higher for a longer period of time.”
If you want to take advantage of lowering interest rates, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
HOMEBUYERS FEEL GOOD ABOUT WHERE MORTGAGE RATES ARE HEADED: FANNIE MAE
Warmer weather tends to bring a booming housing market as more homebuyers start looking for homes and inventory grows.
Sellers who list their homes in the spring and summer months often make more money when their home sells because the market is more competitive. A Zillow study found that June was the most profitable month for sellers. Homes listed in the first half of June sold for 2.3% more, on average, putting about $7,700 more in the pocket of sellers.
Location matters when it comes to selling power. In San Francisco, the best time to list is the second half of February, but the first half of July is the best time to sell in New York and Philadelphia.
Certain locations also boast even higher profits during warmer months. During the hottest time of the year, homes in San Jose sold for 5.5% more, boosting profits by $88,000 on an average home, according to Zillow. However, homes in San Antonio sold for just 1.9% more during the same time frame.
“Most sellers don’t have the luxury of timing the market,” Zillow Chief Economist Skylar Olsen said. “The best time to list is when it makes the most sense for their lives.”
“Regardless of the month, sellers who list their home for sale this spring can expect plenty of interest if their home is marketed and priced right.,” she contined. “That’s why it’s more important than ever to hire a real estate agent with the experience to localize your strategy when comparable sales might be further afield.”
If you’re looking to compete with other buyers this spring, you can explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage preapproval letter in minutes.
HOMEBUYERS GAINED THOUSANDS OF DOLLARS AS MORTGAGE INTEREST RATES FALL: REDFIN
Buyers are facing a tougher market than they did a few years ago. To comfortably afford a home, buyers need to make more than $106,000 annually, another Zillow study showed. This income requirement is 80% higher than in 2020.
Monthly mortgage payments are higher than ever and have doubled since 2020. Payments average $2,188, assuming the buyer puts 10% down. With such high prices, affordability has become a major issue. In 2020, households earning $59,000 annually could afford the median-priced home without spending more than 30% of their income.
The $106,000 income needed today is well above the average household income in the U.S. The average household earns about $81,000.
Some areas are more affordable than others and require a much lower income to afford the average-priced home. Pittsburgh buyers need to earn just $58,232 to afford the average home. Memphis residents need $69,976 and Cleveland residents need $70,810.
Costlier cities like San Jose and San Francisco require much more in annual income to afford a home. San Jose requires an average annual income of $454,296 while San Francisco requires $339,864, according to Zillow.
To see if you qualify for a mortgage based on your current credit score and salary, consider using Credible, where you can compare multiple mortgage lenders at once.
15% OF AMERICANS HAVE CO-PURCHASED A HOME WITH A NON-ROMANTIC PARTNER, EVEN MORE WOULD CONSIDER IT
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Source: foxbusiness.com
Inside: Learn how much your 70k salary is hourly. Plus find tips to make more money and live the lifestyle you want.
You want to know to look into this… Is 70k salary a solid hourly wage in today’s society?
When you get a job and you are making about $19 an hour, making over $70,000 a year seems like it would provide amazing opportunities for you. Right?
The median household income was $70,084 in 2021 not much different from the previous year (source). Think of it as a bell curve with $70 at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $55,350 for a 40-hour workweek; that is an increase of 1.1% from the previous year (source). That means if you take everyone’s income and divide the money out evenly between all of the people.
Obviously, $70k is above the average and median incomes; yet, most people feel like they can barely make ends meet with this higher than average salary.
But, the question remains… Can you truly live off 70,000 per year in today’s society? The question you want to ask all of your friends is whether $70000 per year is a good salary.
In this post, we are going to dive into everything that you need to know about a $70000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $70k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 70k a year hourly. That way you can decide whether or not the job is worthwhile for you.
70000 salary / 2080 hours = $33.65 per hour
$70000 a year is $33.65 per hour
For our calculations to figure out how much is 70K salary hourly, we used the average five working days of 40 hours a week.
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $70000 by 2,080 working hours and the result is $33.65 per hour.
Just below $34 an hour.
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
Just an interesting note… if you were to increase your annual salary by $10K, it would increase your hourly wage by $4.81 per hour.
To break it down – 80k a year is how much an hour = $38.46
That is a huge difference in what you are able to afford! Every dollar adds up to under $40 an hour.
On average, the monthly amount would be $5,833.33.
Annual Salary of $70,000 ÷ 12 months = $5,833.33 per month
This is how much you make a month if you get paid 70000 a year.
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $70k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of $70000/52 weeks = $1,346 per week.
For this calculation, take the average weekly pay of $1,346 and double it.
$1,346 per week x 2 = $2,692
Also, the other way to calculate this is:
Annual Salary of $70000 / 26 weeks = $2,692 biweekly.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour work day.
8 hours x 52 weeks = 260 working days
Annual Salary of $70000 / 260 working days = $269 per day
If you work a 10 hour day on 208 days throughout the year, you make $336 per day.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Are you passionate about words and reading?
If so, proofreading could be a perfect fit for you, just like it’s been for countless of readers! Learn how you can create a freelance business as a proofreader.
Check out this free workshop!
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
$70000 Salary – Full Time | Total Income |
---|---|
Yearly Salary (52 weeks) | $70,000 |
Monthly Salary | $5,833 |
Weekly Wage (40 Hours) | $1,346 |
Bi-Weekly Wage (80 Hours) | $2,692 |
Daily Wage (8 Hours) | $269 |
Daily Wage (10 Hours) | $336 |
Hourly Wage | $33.65 |
Net Estimated Monthly Income | $4,453 |
Net Estimated Hourly Income | $25.69 |
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with a salary range of up to $160,200.
When you start getting into a higher salary range, the more you make, the more money that you have to pay in taxes.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 70000 a year after taxes?
Gross Annual Salary: $70,000
$70k Per Year After Taxes is $53,445.
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$53445 ÷ 2,080 hours = $25.69 per hour
After estimated taxes and FICA, you are netting $53,445 per year, which is $16,555 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody who lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $70000 income can range from $47,845 to $56,245 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously, you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $70,000 income.
More than likely, your salary is not a flat 70k, here is a tool to convert your salary to hourly calculator.
If you make 70000 a year, learn how much house can you afford.
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person? And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences between living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $70,000 a year is going to be much more difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live a very frugal lifestyle and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can live a much more lavish lifestyle because the cost of living is less. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $70,000 a year is above the median income of $60000 that you would find in the United States. Thus, you are able to live an above-average lifestyle here in America.
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 70k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money is left for fun spending.
If you want to know how to manage 70k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
Category | Ideal Percentages | Sample Monthly Budget |
---|---|---|
Giving | 10% | $583 |
Savings | 15-25% | $1167 |
Housing | 20-30% | $1400 |
Utilities | 4-7% | $146 |
Groceries | 5-12% | $394 |
Clothing | 1-4% | $29 |
Transportation | 4-10% | $175 |
Medical | 5-12% | $292 |
Life Insurance | 1% | $15 |
Education | 1-4% | $20 |
Personal | 2-7% | $88 |
Recreation / Entertainment | 3-8% | $146 |
Debts | 0% – Goal | $0 |
Government Tax (including Income Taxes, Social Security & Medicare) | 15-25% | $1389 |
Total Gross Income | $5,833 |
As we stated earlier if you are able to make $70,000 a year, that is a good salary. You are making more money than the average American and slightly less on the bell curve on the median income.
You shouldn’t be questioning yourself if 70000 is a good salary.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. And what they thought used to be a great salary actually is not making ends meet at this time.
This $70k salary would be considered a middle-upper class salary. This salary is something that you can live on very comfortably.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 91 percentile globally for per-person income (source).
The question you need to ask yourself with your 70k salary is:
In the future years and with possible inflation, in some expensive cities, 70000 a year is not a good salary because the cost of living is so high, whereas these are some of the cities where you can make a comfortable living at 70000 per year.
If you are looking for a career change, you want to find jobs paying at least $90,000 per year.
Simply put, yes.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Your living expenses and ideal budget are much less. Thus, you can live extremely comfortably on $70000 per year.
And… most of us probably regret that we didn’t learn how to spend money wisely. Oh well, lesson learned.
Many of the same principles apply above on whether $70000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child. Plus this does not include college.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $70,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
You can live comfortably as a family on this salary, but you will not be able to afford everything you want.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 70,000 per year, then the combined income for the household would be $140,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
As we outlined earlier in the post, $70,000 a year:
Next up is making $75000 a year.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a middle-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than in Mississippi or even Texas.
In addition, if you are early in your career, starting out around 45,000 a year, that is a great place to be getting your career. However, if you have been in your career for over 20 years and still making $70K, then you probably need to look at asking for pay increases, picking up a second job, or finding a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to stick to our ideal household budget percentages to make sure you stay on track.
Learn exactly how much do I make per year…
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
This is the perfect side hustle if you don’t have much time, experience, or money.
Many earn over $10,000 in a year selling printables on Etsy. Learn how to get started by watching this free workshop.
Are you passionate about words and reading?
If so, proofreading could be a perfect fit for you, just like it’s been for countless of readers! Learn how you can create a freelance business as a proofreader.
Check out this free workshop!
If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!
This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own business from scratch.
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
You can make money as a freelance writer. Learn techniques to find those jobs and earn the kind of money you deserve!
Plus get tips to land your first freelance writing gig!
Learn how to buy and resell items from flea markets, thrift stores and yard sales. They will teach you how to create a profitable reselling business quickly
…no matter how much or how little experience you have.
Learn how to supplement your daily, weekly, or monthly income with trading so that you can live your best life! This is a lifestyle trading style you need to learn.
Honestly, this course is a must for anyone who invests. You will lose more in the market than you will spend this quality education – guaranteed.
Read my Invest with Teri Review.
Designed as a 101-level course on freight brokerage, you’ll learn the basics of freight brokering in this online course.
This course is designed for freight brokers in any setting, regardless of their employment status.
If you want to start your brokerage, we’ll show you exactly how to do it. If you are an agent or employee of a brokerage, we’ll take you through sales and operations modules designed to help you source more leads and move more freight.
The Empowered Business Lab teaches you how to sell your digital products naturally with strategies that just make sense.
Monica helps thousands find momentum and create revenue streams in their businesses.
After taking a second job as a driver for Amazon to make ends meet, this former teacher pivoted to be a successful stock trader.
Leaving behind the stress of teaching, now he sets his own schedule and makes more money than he ever imagined. He grew his account from $500 to $38000 in 8 months.
Check out this interview.
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Source: moneybliss.org
100k salary is when you feel like you have arrived in your career. You know living on this amount of income would be simple. But, is making $100000 doable in today’s high inflation world?
When you get a job and you are making about $28 an hour, making over $100,000 a year seems like it would provide amazing opportunities for you. Right?
The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source). Think of it as a bell curve with $68K at the top; median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divide the money out evenly between all of the people.
Obviously, $100k is well above the average and median incomes; yet, most people feel like they can barely make ends meet with this much higher than average salary.
But, the question remains can you truly live off 100,000 per year in today’s society. The question you want to ask all of your friends is $100000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $100000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $100k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 100k a year hourly. That way you can decide whether or not the job is worthwhile for you.
For our calculations to figure out how much is 100K salary hourly, we used the average five working days of 40 hours a week.
Let’s breakdown how that 100000 salary to hourly number is calculated.
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $100000 by 2,080 working hours and the result is $48.08 per hour.
100000 salary / 2080 hours = $48.08 per hour
$100000 a year is $48.08 per hour
This is just above $45 an hour.
That number is the gross hourly income before taxes, insurance, 401K or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
Just an interesting note… if you were to increase your annual salary by $5K or start a side hustle making $5k a year, it would increase your hourly wage by $2.40 per hour.
To break it down – 105k a year is how much an hour = $50.48
That isn’t a huge amount of money, but every dollar adds up to over $50 an hour.
On average, the monthly amount would be $8,333.
Annual Salary of $100,000 ÷ 12 months = $8,333 per month
This is how much you make a month if you get paid 100000 a year.
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of a $100k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of $100000/52 weeks = $1,923 per week.
For this calculation, take the average weekly pay of $1,923 and double it.
$1,923 per week x 2 = $3,846
Also, the other way to calculate this is:
Annual Salary of $100000 / 26 weeks = $3,846 biweekly.
This depends on how many hours you work in a day. For this example, we are going to use an eight hour work day.
8 hours x 52 weeks = 260 working days
Annual Salary of $100000 / 260 working days = $384 per day
If you work a 10 hour day on 208 days throughout the year, you make $480 per day.
$100000 – Full Time | Total Income |
---|---|
Yearly (52 weeks) | $100,000 |
Monthly | $8,333 |
Weekly (40 Hours) | $1,923 |
Bi-Weekly (80 Hours) | $3,846 |
Daily Wage (8 Hours) | $384 |
Daily Wage (10 Hours) | $480 |
Hourly Wage | $48.08 |
Net Estimated Monthly Income | $6,362 |
Net Estimated Hourly Income | $36.71 |
Learn how much house can I afford with 100k salary.
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you start getting into a higher salary range, the more you make, the more money that you have to pay in taxes.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 100000 a year after taxes?
Gross Annual Salary: $100,000
$100k Per Year After Taxes is $76,350.
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$76,350 ÷ 2,080 hours = $36.71 per hour
After estimated taxes and FICA, you are netting $76350 per year, which is a whopping $23,650 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $100000 income can range from $68,350 to $80,350 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $100,000 income.
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences of living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $100,000 a year is going to be much more difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live a very frugal lifestyle and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can live a much more lavish lifestyle because the cost of living is less. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $100,000 a year is well above the median income of $40000 that you would find in the United States. Thus, you are able to live an upper-class lifestyle here in America.
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 100k a year is going to be pretty darn difficult.
Two factors will keep holding you back:
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money is left for fun spending.
If you want to know how to manage a 100k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
Category | Ideal Percentages | Sample Monthly Budget |
---|---|---|
Giving | 10% | $833 |
Savings | 15-25% | $1683 |
Housing | 20-30% | $2000 |
Utilities | 4-7% | $229 |
Groceries | 5-12% | $667 |
Clothing | 1-4% | $33 |
Transportation | 4-10% | $225 |
Medical | 5-12% | $375 |
Life Insurance | 1% | $21 |
Education | 1-4% | $25 |
Personal | 2-7% | $83 |
Recreation / Entertainment | 3-8% | $188 |
Debts | 0% – Goal | $0 |
Government Tax (including Income Taxes, Social Security & Medicare) | 15-25% | $1971 |
Total Gross Income | $8,333 |
As we stated earlier if you are able to make $100,000 a year, that is a good salary. You are making more money than the average American and slightly less on the bell curve on the median income.
You shouldn’t be questioning yourself if 100000 is a good salary.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. And what they thought used to be a great salary actually is not making ends meet at this time.
The good news is you are in the six figures club!
This $100k salary would be considered a upper-middle class salary. This salary is something that you can live on very comfortably.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 91 percentile globally for per person income (source).
The question you need to ask yourself with your 100k salary is:
In the future years and with possible inflation, some expensive cities 100,000 a year is not a good salary because the cost of living is so high, whereas these are some of the cities that you can make a comfortable living at 100,000 per year. You probably need to make $200k a year.
If you are looking for a career change, you may want to look at is being your boss or starting a side business. Then, you can move towards seven figures.
Simply put, yes.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Your living expenses and ideal budget are much less. Thus, you can live extremely comfortably on $100000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Many of the same principles apply above on whether $100000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The cost of raising a child born in 2015 is $233,610 (source). That is from birth to the age of 17 and this does not include college.
As you can tell this is a huge dent in your income, specifically $12,980 annually per child. If you make the decision to have children, then you need to be financially prepared for the impact on your finances.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $100,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
You can live comfortably as a family on this salary, but you will not be able to afford everything you want.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if one party was making 100,000 per year and the other 55000 per year, then the combined income for the household would be $155,000. Thus making your combined salary an upper class income.
Learn how much money a family of 4 needs in each state.
As we outlined earlier in the post, $100,000 a year:
You should be very grateful you are not living on $30000 a year anymore.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a middle-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than Oklahoma or even Texas.
In addition, if you are early in your career, starting out around 65,000 a year, that is a great place to be getting your career. However, if you have been in your career for over 20 years and making $100K, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to stick to our ideal household budget percentages to make sure you stay on track.
Learn exactly how much do I make per year…
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Source: moneybliss.org
Americans Believe They Will Need $1.46 Million to Retire Comfortably According to Northwestern Mutual 2024 Planning & Progress Study People’s ‘magic number’ for retirement rises faster than inflation, jumping 15% in just a year and a whopping 53% since 2020; while retirement savings falls to $88K The ‘Silver Tsunami’ is here: 11,000 Americans will turn 65 … [Read more…]
Fleming noted that income growth is expected to moderate further in 2024 as the labor shortage narrows. At the same time, mortgage rates are projected to retreat from their peak of 7.6% in October 2023, with industry forecasts averaging around 6.25% by the end of 2024 as inflation recedes. “If mortgage rates fall to 6.25% … [Read more…]
What if you could secure a USDA home loan that allows you to buy a house with no down payment, competitive mortgage rates, and reduced mortgage insurance costs?
It might sound like a dream, but it’s entirely possible with the USDA mortgage program. Designed to assist low- and moderate-income Americans in becoming homeowners, USDA loans provide incredibly affordable financing options for eligible buyers.
Essentially, USDA mortgages empower individuals to transition from renting to owning, even when they thought homeownership was out of reach.
Verify your USDA loan eligibility. Start here
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>Related: How to buy a house with $0 down: First-time home buyer
USDA loans are mortgages backed by the U.S. Department of Agriculture as part of its Rural Development Guaranteed Housing Loan program. The USDA offers financing with no down payment, reduced mortgage insurance, and below-market mortgage rates.
Verify your USDA loan eligibility. Start here
The USDA mortgage program is intended for home buyers with low-to-average household incomes. In order to qualify, you must also purchase a home in a “rural area” as the USDA defines it. Those who are eligible can use a USDA mortgage to buy a home or refinance one they already own.
USDA loans offer nearly unbeatable benefits for qualified borrowers. So if this program sounds like a good fit for you, it’s worth getting in touch with a participating lender to find out if you’re eligible.
The U.S. Department of Agriculture insures USDA loans. Thanks to government guarantees and subsidies, lenders can offer 100% financing and below-market interest rates without taking on too much risk.
Verify your USDA loan eligibility. Start here
Although the USDA backs this program, it typically isn’t the one lending money. Instead, private lenders are authorized to offer USDA loans. That means you can get a USDA mortgage from many mainstream banks, mortgage lenders, and credit unions.
The application process for a USDA mortgage works just like any other home loan. You’ll compare rates and choose a lender, complete an application (often online), provide financial documents, wait for the lender’s approval, and then set a closing day.
The only exception is for very low-income borrowers, who may qualify for a USDA Direct home loan. In this case, you’d go straight to the Department of Agriculture to apply rather than to a private lender.
For eligible individuals and families looking to buy, build, or renovate a home in a rural area, the USDA offers three main mortgage loan types. The loan programs are as follows:.
Verify your USDA loan eligibility. Start here
Approved private lenders, such as banks and mortgage companies, provide USDA loan guarantees to qualified borrowers. A USDA guaranteed loan is one in which the government backs a portion of the loan, lowering the lender’s risk and allowing them to offer more favorable terms to the borrower. These loans frequently have low interest rates, no down payment, and more lenient credit requirements. The property must be in an eligible rural area as the USDA defines it, and borrowers must meet household income requirements that vary depending on location and household size.
The USDA also offers the Single Family Housing Direct loan through the Section 502 Direct Loan Program. These loans are meant to help low-income families buy, build, or fix up small homes in rural areas. The USDA, rather than private lenders, provides funding for direct loans as opposed to guaranteed loans. These loans have favorable terms, such as low interest rates (as low as 1% with payment assistance) and long repayment periods (up to 38 years for eligible applicants). Income, creditworthiness, and the property’s location in an eligible rural area determine eligibility for direct loans.
The USDA’s Single Family Housing Repair Loans and Grants program, also known as the Section 504 program, provides financing for home improvements. This program provides low-interest, fixed-rate loans and grants to low-income rural homeowners for necessary home repairs, improvements, and modifications that make their homes safer, more energy-efficient, and more accessible. However, if you’re looking for one, you might have a difficult time finding this type of USDA home loan. They are not widely available from lenders.
To be eligible for a USDA home loan, you’ll need to meet a number of requirements that vary depending on whether you are applying for a USDA loan guarantee or a USDA direct loan.
Verify your USDA loan eligibility. Start here
Some general requirements, however, apply to all USDA loans, specifically those based on both buyer and property eligibility.
The USDA defines an eligible area in rural America as having a population of 20,000 or fewer. To check if the property you’re considering falls within these designated areas, the USDA’s eligibility site provides all the necessary information. We also provide a USDA eligibility map below.
USDA loans are exclusively available for primary residences. Neither investment properties nor second homes are eligible for this program.
The property must adhere to the USDA’s minimum property requirements, which focus on safety, structural integrity, and adequate access to utilities and services.
You must meet USDA monthly income limits, meaning your household income can’t exceed 115% of the area median income. Conforming to USDA income eligibility requirements ensures the program is accessible to those it’s intended to serve.
Applicants are required to demonstrate a stable and dependable income, typically for at least 24 months, before applying. This helps ensure borrowers can maintain their loan payments.
Although USDA loans are known for their flexible credit requirements, creditworthiness is still important. Lenders usually seek a minimum credit score of 640 for guaranteed loans, with USDA Direct Loans potentially having more lenient criteria.
Your monthly debt, including future mortgage payments, generally should not exceed 41% of your gross monthly income. However, lenders may make exceptions based on credit score and available cash reserves.
Applicants need to be U.S. citizens, U.S. non-citizen nationals, or qualified aliens with a valid Social Security number to qualify for a USDA loan.
The USDA eligibility map is a valuable online resource for potential borrowers. It helps them identify if a property is situated in an area of rural America that qualifies for USDA home loans.
Verify your USDA loan eligibility. Start here
Users can enter a specific address or explore areas of the map to see if they qualify for USDA guaranteed loans or direct loans by using this interactive map.
1 Source: USDAloans.com, based on Housing Assistance Council data
Compared to other home loan programs, USDA mortgage interest rates are some of the lowest available.
Check your USDA loan rates. Start here
The VA loan, specifically tailored for veterans and service members, stands alongside the USDA loan as one of the few government-backed loan programs offering competitively low rates. Due in large part to the security that government subsidies and guarantees provide, both the USDA and VA programs are able to offer interest rates below the market average.
Other mortgage programs, like the FHA loan and conventional loan, can have rates around 0.5%–0.75% higher than USDA rates on average. That said, mortgage rates are personal. Getting a USDA loan doesn’t necessarily mean your rate will be “below-market” or match the USDA loan rates advertised.
Strengthening your financial standing is essential for obtaining the best USDA loan rates. Here are some helpful techniques for improving your personal finances:
When it comes to financing a home purchase with a USDA loan, it’s not just the mortgage rate that you need to consider. You’ll be responsible for various fees and costs, which can add up over time. Understanding these costs upfront can help you make a more informed decision and plan your budget accordingly.
Here’s a breakdown of the expenses you can expect:.
The USDA guarantees its mortgage loans, meaning it offers protection to approved mortgage lenders in case borrowers default. But the program is partially self-funded. To keep this loan program running, the USDA charges homeowner-paid mortgage insurance premiums.
Verify your USDA loan eligibility. Start here
One of the first costs you’ll encounter is the upfront guarantee fee. This fee is a percentage of the loan amount and is required by the USDA to secure the loan. It’s usually around 1% but can vary. You can either pay this fee upfront or roll it into the loan balance.
Unlike conventional loans that may not require mortgage insurance, USDA loans come with a monthly mortgage insurance premium. You can expect to pay a 0.35% annual guarantee fee based on the remaining principal balance each year.
The annual fee is broken into 12 installments and included in your regular mortgage payment.
As a real-life example, a home buyer with a $100,000 loan size would have a $1,000 upfront mortgage insurance cost plus a monthly payment of $29.17 for the annual mortgage insurance. USDA upfront mortgage insurance is not paid in cash. It’s added to your loan balance, so you pay it over time.
Before the loan is approved, the property will need to be inspected to ensure it meets USDA property eligibility requirements. This inspection can cost anywhere from $300 to $500, depending on the location and size of the home.
Closing costs are a mix of fees that include loan origination fees, appraisal fees, title search fees, and more. These costs can range from 2% to 5% of the home’s purchase price. Some of these costs can be rolled into the loan amount, but it’s best to be prepared to pay some of them out-of-pocket.
Qualifying for a USDA home loan can be a great way to finance a home, especially if you’re looking to buy in a rural area. These loans offer attractive benefits like zero down payments and competitive interest rates.
However, the USDA loan approval process involves several steps and specific eligibility criteria. Here’s a guide on how to apply for a USDA home loan.
Check your USDA loan eligibility. Start here
Before diving into the application process, it’s important to determine if you meet the USDA’s eligibility requirements. These typically include:
You’ll need to provide various documents to prove your eligibility, including:
Contact a USDA-approved lender to get pre-qualified for a loan. During this qualifying process, the participating lender will review your financial situation to give you an estimate of how much you can borrow.
Check if you’re eligible for a USDA loan. Start here
Both pre-approval and pre-qualification can give you a better idea of your budget and show sellers that you are a serious buyer.
Once pre-qualified, you can start looking for a property that meets USDA guidelines. Keep in mind that the home must be your primary residence and be located in an eligible rural area.
Working with a real estate agent who has experience with USDA loans can be a big advantage.
After finding the right property, you’ll need to fill out the USDA loan application. Your lender will guide you through this process, which will include a more thorough review of your financial situation and the submission of additional documents.
The lender will arrange for an appraisal to ensure the property meets USDA standards. An inspection may also be required to identify any potential issues with the home.
Once the appraisal and inspection are complete and all documentation is verified, you’ll move on to the loan approval stage. If approved, you’ll proceed to closing, where you’ll sign all necessary paperwork and officially secure your USDA home loan.
With the loan secured and the keys in hand, you’re now ready to move into your new home!
By following these steps and working closely with a USDA-approved lender, you can navigate the USDA home loan process with confidence. Always remember to consult with your lender for the most accurate and personalized advice.
USDA loans and conventional loans both have fixed terms and interest rates, but they’re different when it comes to down payments and fees.
USDA loans don’t ask for a down payment, unlike conventional mortgages, which usually require a 3% down payment. FHA loans require a 3.5% down payment. VA loans, like USDA loans, also don’t require a down payment.
Both USDA loans and conventional loans need an appraisal from an independent third party before the loan is approved.
The home appraisal for a conventional loan determines whether the loan amount and the home’s value match. If the loan amount doesn’t measure up to the market value of the home, the lender can’t get back their money just by selling the house. If you want to know more about the home’s condition, like the roof or appliances, you need to get a home inspector.
For a USDA loan, the appraisal does two things:
If you’re looking for a detailed report on the house, hiring a home inspector is still a good idea.
While conventional loans charge private mortgage insurance (PMI) when you make less than a 20% down payment, this isn’t the case with USDA loans. You don’t need PMI for USDA direct or guaranteed loans.
However, USDA guaranteed loans have a guarantee fee of 1% at closing and then an annual fee of 0.35% of the loan, added to your monthly payment. You can roll the initial fee into your loan amount.
The term for a USDA guaranteed loan is 30 years with a fixed rate. If you get a USDA direct loan, you can have up to 33 years to pay it back. If you’re a very low-income borrower, you might get up to 38 years to make it more affordable.
Verify your USDA loan eligibility. Start here
The USDA Rural Housing Mortgage, officially known as the Single Family Housing Guaranteed Loan Program, is a rural development loan aimed at helping single-family home buyers. It’s often referred to as a “Section 502” loan, based on the Housing Act of 1949 that created this program. Designed to stimulate growth in less-populated and low-income areas, this rural development loan is ideal for those looking to buy in eligible rural areas with the possibility of a zero-down payment.
The income limit for USDA home loans is based on your area’s median income. To be eligible for a USDA loan, you can’t exceed the median income by more than 15 percent. For example, if the median salary in your city is $65,000 per year, you could qualify for a USDA loan with a salary of $74,750 or less.
USDA lenders have to send each loan file to the Department of Agriculture for approval before underwriting. This can add around two to three weeks to your loan processing time.
No, cash-out refinancing is not allowed in the USDA Rural Housing Program. Its loans are for home buying and rate-and-term refinances only.
The USDA does not set loan limits, but your household income and debt-to-income ratio have a limit on the amount you can borrow. The USDA typically caps debt-to-income ratios at 41 percent. However, the program may be more lenient for borrowers with a credit score over 660 and stable employment or who show a demonstrated ability to save.
You can find a USDA loan lender by visiting the U.S. Department of Agriculture’s website, which maintains a list of approved lenders for the Rural Housing Program. The USDA Rural Housing loan offers a 30-year fixed-rate mortgage only, with no 15-year fixed option or adjustable-rate mortgage (ARM) program available.
Yes, USDA rural development loans allow both gifts from family members and non-family members for closing costs. Inform your loan officer as soon as possible if you’ll be using gifted funds, as it requires extra documentation and verification from the lender. Additionally, the USDA Rural Housing Program permits sellers to pay closing costs for buyers through seller concessions. These concessions may cover all or part of a purchase’s state and local government fees, lender costs, title charges, and various home and pest inspections.
No, the USDA loan program is designed specifically for primary residences and cannot be used for vacation homes, investment properties, or working farms. The Rural Housing Program focuses on residential property financing.
If you are a W-2 employee, you are eligible for USDA financing immediately, as there’s no job history requirement. However, if you have less than two years in a job, you may not be able to use your bonus income for qualification purposes. Self-employed individuals can also use the USDA Rural Housing Program. To verify your self-employment income, you will need to provide two years of federal tax returns, similar to the requirements for FHA and conventional financing.
Yes, the USDA loan program can be used for various purposes, including making eligible repairs and improvements to a home (such as replacing windows or appliances, preparing a site with trees, walks, and driveways, drawing fixed broadband service, and connecting utilities), permanently installing equipment to assist household members with physical disabilities, and purchasing and installing materials to improve a home’s energy efficiency (including windows, roofing, and solar panels).
Yes, along with U.S. citizens, legal permanent residents of the United States can also apply for a USDA loan.
USDA mortgage interest rates consistently rank among the lowest in the market, next to VA loans.
USDA loans can be particularly attractive to borrowers seeking optimal financial terms, especially in an environment with elevated interest rates. Prospective homebuyers who meet the criteria for a USDA loan may be able to secure a great deal right now.
To find out whether you qualify for one and what your rate is, consult with a trusted lender below.
Time to make a move? Let us find the right mortgage for you
1 Source: USDAloans.com, based on Housing Assistance Council data
Source: themortgagereports.com
To paraphrase Julie Andrews and the Muppets: The springtime cometh for the housing market. This is traditionally the time when home sales bloom. But 2023’s deep freeze begs the question of whether the warming will emerge from under an ice cube or an iceberg. This season, the economists say, will be no picnic.
Take the typical home value of $349,216, which is more than 40% higher than before the pandemic. Home prices increased on a monthly basis in 45 of the 50 largest metropolitan areas in February, and they’re up in 47 of the 50 largest metropolitan areas on an annual basis, per Zillow. (By Redfin’s count, prices increased in all 50 of the most populous metropolitan areas, which is the first time that’s occurred since the summer of 2022.)
The typical mortgage payment more than doubled during the pandemic, rising by roughly 106%, and is still up 9% from last year, according to Zillow. Mortgage rates have fallen from their recent peak at slightly above 8%, but they’re still high compared to previous historic lows. While the average 30-year fixed mortgage rate is sitting at 7.02%, as of the latest reading, the expectation is that it’ll come down further if the Federal Reserve cuts interest rates this year.
So it’s not an easy market by any means, as Wells Fargo’s economics team recently concluded: “The housing market continues to navigate tumultuous waters.” But more inventory is coming on the market, with the easing of the so-called lock-in effect, which refers to homeowners holding onto their homes for fear of losing their low mortgage rates. The lock-in effect was a major factor last year in pushing existing home sales to their lowest point in almost 30 years.
“A substantial infusion of new inventory to the market is welcome news for buyers on the hunt for their next home this spring—and more evidence that the effects of ‘rate lock’ are starting to weaken,” Zillow’s chief economist wrote recently in a market report.
New listings of existing homes on Zillow are up 21% in February compared to last year and 20% from the prior month; on a local level, more sellers are coming back to the market in Dallas, Minneapolis, and Austin, where new listings are the highest. And according to Redfin, new listings are up 13%, which is the biggest annual increase in almost three years. The total number of homes for sale is up 3%, and that’s the biggest increase in nine months, Redfin’s data journalist, Dana Anderson, recently wrote in a market update. (Zillow’s analysis shows there are 12% more total active listings than last year.)
So maybe this year’s crucial spring selling season is shaping up more like a shopping window, if not a mini-spring season.
Pending sales are down 6% from the prior year, according to Redfin, which means high housing costs are continuing to price out some would-be homebuyers. There’s also competition even as the market has cooled down, particularly among “attractively-priced and well-marketed homes,” as Zillow put it. That doesn’t seem like it’ll ever completely change given the housing market is missing anywhere between 2 million and 7 million homes, despite an increase in listings.
So what’ll happen to existing home sales this year? They rose 3.1% in January from the previous month, but declined 1.7% from a year earlier. Better economic conditions, and a more stabilized housing market, might not solve all.
“Although lower financing costs, rising supply and brightening economic growth prospects may help home sales turn around from the sharp contraction experienced over the past two years, the recovery will likely be limited by adverse affordability conditions stemming from home price appreciation far outpacing income growth over the past several years,” Wells Fargo senior economist Charlie Dougherty and economic analyst Patrick Barley wrote in a newly shared note titled: “Housing Market 2024: An Early Spring or Longer Winter.”
We know lower mortgage rates will not only somewhat improve affordability, and therefore help bring back demand, but also bring more sellers onto the market and increase supply. It’s why Dougherty and Barley said existing home sales started off on a “positive note,” and expect them to improve modestly this year.
But it really comes down to the fact that “home price appreciation has far outpaced household income growth in recent years,” as the Wells Fargo economics team put it. “Home values are now roughly five times higher than median household incomes, a stark change from the 3.5 ratio averaged historically,” they wrote.
Not to mention, the Wells Fargo team expects home prices to increase another 3.1% in 2024 and 4.3% the year after. “If these forecasts come to fruition, then affordability is not likely to meaningfully improve,” Dougherty and Barley wrote.
Source: fortune.com
Feelings of Financial Insecurity in America Soar to Record High, Even as Consumer Anxiety About the Economy and Recession Recede Northwestern Mutual’s 2024 Planning & Progress Study finds just over half of U.S. adults expect recession this year, a significant drop from two-thirds who said the same in 2023 One-third (33%) of Americans say they … [Read more…]
He pointed to the marked improvement in sentiments toward selling, which could signal an influx of existing home listings in the near future. He also noted a lingering optimism among consumers that mortgage rates might see a decline over the next 12 months, which could potentially energize the housing market even more. “If their expectations … [Read more…]
USDA loans are one of many options available to finance a home purchase. However, their attributes and eligibility requirements make them unique from other types of home loans. Still, if a USDA home loan is an option for you, there are some big perks you might want to take advantage of.
A USDA home loan is a no-down payment mortgage for low- and moderate-income homebuyers in largely rural areas. USDA loans are part of a national program created by the U.S. Department of Agriculture to help create loans for first-time homebuyers or people who don’t meet conventional mortgage requirements. They are sometimes referred to as rural development or RD loans.
Along with no need for a down payment, USDA loans have another advantage: You could qualify for a low, fixed interest rate if you have low income.
Some drawbacks, though, are that the property must be located in a USDA-approved area, and borrowers cannot exceed income limits.
USDA eligibility requirements include:
The easiest way to find out if a home is in a USDA-eligible area is to check the USDA website. Homes purchased with USDA loans must be located in eligible rural areas. The USDA defines these areas as “open country or any town, village, city, or place, including the immediately adjacent densely settled area, which is not part of or associated with an urban area.”
USDA mortgages are only available in these rural areas as part of a government initiative to promote homeownership and economic growth. These loans can help attract and retain people in these locations.
The USDA guaranteed loan program is geared toward low- and moderate-income homebuyers. For this reason, applicants can’t earn more than certain income limits, which vary by metro area and family size. In more expensive areas, the income ceiling is higher. You can check income limits for your county and household size using the same property eligibility tool on the USDA website.
To prove income, you’ll need to provide the lender with documentation such as:
The USDA doesn’t impose a blanket credit score requirement for all borrowers, but typically, USDA-approved lenders look for a score of at least 640.
Different types of USDA loans cater to different buyers, each coming with its own requirements and reasons for use. Let’s break them down.
The USDA guaranteed home loan program (officially known as Section 502 Guaranteed) allows approved mortgage lenders to provide 30-year fixed-rate loans to borrowers in USDA-eligible locations. It’s called a “guaranteed loan” because the USDA guarantees 90 percent of the loan to lenders in the event you were to default on the mortgage.
Along with buying a home in a USDA-approved area, you’ll also need to meet an income requirement: no more than 115 percent of your area’s median household income (AMI). You can find income limits for your market using this tool.
Also known as Section 502 Direct, USDA direct loans offer low-rate home loans to individuals in rural areas in need of adequate housing. Unlike USDA guaranteed loans, you’ll apply for a direct loan through the USDA’s Rural Development Service Centers.
Direct loans are only available to households with low and very low income. (You can view income limits here). There’s also a limit on how much you can borrow, depending on the county where the home is located. (You can view area loan limits here.)
Direct loans have a fixed interest rate, which can be reduced to 1 percent if you qualify for payment assistance. The loan terms range up to 33 years, or 38 years for very low income borrowers.
The USDA repair loan program (Section 504 Home Repair) is similar to the direct program in that it caters to low-income individuals. But it’s different in that it provides loans only up to $40,000 and only to help improve or repair a home. It also offers grants to very low-income homeowners aged 62 or older to help remove hazards at home. These are capped at $10,000.
The major benefit of a USDA home loan is that there’s no down payment requirement. This can be a great program for homebuyers on a budget who are flexible about where they live. The cons mostly have to do with the restrictions on where you can buy or how much income your family can make.
To apply for a USDA loan, you’ll first need to determine if you qualify. Consult the USDA property and income eligibility maps. If you meet those parameters, next consider whether you’ll want or need a guaranteed or direct loan. Remember: Guaranteed loans have higher income limits, and you’ll apply for one through a USDA-approved lender. Direct loans, on the other hand, are reserved for lower-income borrowers who lack access to safe housing.
When you’re ready to apply, you’ll submit paperwork about your finances, including income, assets and debt, and undergo a credit check. If preapproved, you can begin searching for a home in an appropriate area based on USDA eligibility.
USDA mortgages come with two fees:
Both of these fees are charged to the lender, who then usually passes the cost on to the borrower. These fees keep USDA loans subsidy-neutral, which means that any losses incurred by the program are paid for by these fees instead of taxpayer dollars. Depending on the needs of the program, the fees can change annually.
Along with the two USDA fees listed above, you’ll need to cover regular mortgage costs. These may include:
USDA loans aren’t the only type of mortgage out there. If you’re not eligible for a USDA loan, you might be for an FHA or VA loan, or even a conventional loan. Here’s an overview of some key differences between these types of loans:
USDA loan | Conventional loan | FHA loan | VA loan | |
---|---|---|---|---|
Credit requirements | None, but 640 is standard | 620 | 580 | None unless lender requires |
Debt-to-income (DTI) ratio requirements | Up to 41% | Up to 43% | Up to 50% | Up to 41% |
Down payment requirements | None | 3% or 5% | 3.5% | None |
Source: bankrate.com