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how much could you borrow for a house?

Blackca3

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Title pretty much sums it up. Just wondering how much the bank was willing to lend you for a house?

I've heard about 4x your annual income is what they will lend regularly. Is that increased for dentists?

It’s going to depend on a large number of factors. The bank, type of loan, credit score, credit utilization, debt to income ratio, current loan balances. I’ve never tried to ask a bank what the max is they would give me but didn’t have any issues securing a loan when I bought my 2nd and 3rd house. There are separate loans types for doctors.
 

Anondds87

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It’s going to depend on a large number of factors. The bank, type of loan, credit score, credit utilization, debt to income ratio, current loan balances. I’ve never tried to ask a bank what the max is they would give me but didn’t have any issues securing a loan when I bought my 2nd and 3rd house. There are separate loans types for doctors.
Were these houses (2nd 3rd etc) investment properties or personal? Did you end up getting more than 4x your annual income?
 
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allDAT

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The bank is not necessarily going to take into account the total value of the house except for property taxes. They’re looking at the monthly mortgage and other expenses (like HOA etc) and what percentage of your income is used to service debt (your debt to income ratio). More specifically, they’ll be looking at your back-end debt to income ratio.
 

Anondds87

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The bank is not necessarily going to take into account the total value of the house except for property taxes. They’re looking at the monthly mortgage and other expenses (like HOA etc) and what percentage of your income is used to service debt (your debt to income ratio). More specifically, they’ll be looking at your back-end debt to income ratio.
I guess I'm mostly interested for my people in my situation, starting out with no real assets, just a couple hundred thousand for a deposit, relatively low cost of living. I could easily derive a mortgage 4x my income which is why I am surprised that I would be capped at a loan of that amount, and wondered if dentists are allowed to borrow more cause we are stable income wise
 

Blackca3

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Were these houses (2nd 3rd etc) investment properties or personal? Did you end up getting more than 4x your annual income?
1st house was VA loan
2nd was conventional loan for investment property
3rd was conventional loan for primary residence
Not sure sure how to answer that last question. House 1 was less than x2 my income at the time. House 2 was around x2 my income when I bought it. I bought 1 and 2 within a few months of each other. I didn’t have a job at all when I bought the third one.
 
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allDAT

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I guess I'm mostly interested for my people in my situation, starting out with no real assets, just a couple hundred thousand for a deposit, relatively low cost of living. I could easily derive a mortgage 4x my income which is why I am surprised that I would be capped at a loan of that amount, and wondered if dentists are allowed to borrow more cause we are stable income wise

You can get a pre qual from a bank in a few business days and they’d be able to let you know your “hypothetical max”.

Like I said, the home’s value isn’t really the most important part. Buying a 650k home with 0% down vs. 20% down vs. 50% down are all very different situations. The more you can put down and the less you need to borrow, the higher your purchase price can be.

Hopefully that makes sense. Dentists can apply for “doctor” loans which are portfolio loans which offer a low down payment without PMI. Typically DR loans are at a comparable interest rate to a traditional mortgage with 20% down, but more often than not, it’s best to go with the traditional Fannie/Freddie if you have the money to put down 20%.
 
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P7898

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The rule of them is no more than 3x your income for a house purchase. I have seen 4x income but they were literally chained to their mortgage......

You only get the benefit of equity from a house when you sell it. I would buy a modest cost house and maximize retirement and do other investments instead of trying to buy and outlandish home.
 
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Anondds87

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The rule of them is no more than 3x your income for a house purchase. I have seen 4x income but they were literally chained to their mortgage......

You only get the benefit of equity from a house when you sell it. I would buy a modest cost house and maximize retirement and do other investments instead of trying to buy and outlandish home.
Crazy... where I live 4x my income is the average price for a house. These comments about getting a house for 2x your income blows my mind
 

Rambunctious

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Title pretty much sums it up. Just wondering how much the bank was willing to lend you for a house?

I've heard about 4x your annual income is what they will lend regularly. Is that increased for dentists?
You can go with the doctor loan which you've heard little or no down, no pmi and they don't count your student loan against you. Do not listen to anyone saying "Traditional loan is better". Seriously why would losing 20% down be better than using that extra cash to make improvements to the house or even pay for the student loans they dont count. I'm baffled sometimes by the financial advice I see on this site.
 
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allDAT

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You can go with the doctor loan which you've heard little or no down, no pmi and they don't count your student loan against you. Do not listen to anyone saying "Traditional loan is better". Seriously why would losing 20% down be better than using that extra cash to make improvements to the house or even pay for the student loans they dont count. I'm baffled sometimes by the financial advice I see on this site.

You may not want to put your 20% down payment towards your student loans if you’re riding out one of the IDR plans as it will be money wasted.

You may also want to put 20% (or more) down on a home to improve your DTI ratio as you pursue other interests and opportunities. In general the primary residence is more of a liability than an asset so locking your money into improving the house (unless your flipping it or building a granny flat/finishing a basement that can be rented out) isn’t a great idea either as it doesn’t improve your cash flow and you don’t know when (or if) you’ll realize the gains from appreciation of the asset.

Doctors loans are great if you can afford the monthly payment with 0% down, but that may not be the case. It depends on the bank and it depends on the underwriter you get within that bank with regards to how lenient the underwriter will be. If you have student loans, they’ll still count as they run the calculations on your backend ratio. When they count your student loans under the doctor loan program, they will accept the IDR payment instead of the standard one - however, they’ll do that with traditional and jumbo loans as well now.
 
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Rambunctious

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You may not want to put your 20% down payment towards your student loans if you’re riding out one of the IDR plans as it will be money wasted.

You may also want to put 20% (or more) down on a home to improve your DTI ratio as you pursue other interests and opportunities. In general the primary residence is more of a liability than an asset so locking your money into improving the house (unless your flipping it or building a granny flat/finishing a basement that can be rented out) isn’t a great idea either as it doesn’t improve your cash flow and you don’t know when (or if) you’ll realize the gains from appreciation of the asset.

Doctors loans are great if you can afford the monthly payment with 0% down, but that may not be the case. It depends on the bank and it depends on the underwriter you get within that bank with regards to how lenient the underwriter will be. If you have student loans, they’ll still count as they run the calculations on your backend ratio. When they count your student loans under the doctor loan program, they will accept the IDR payment instead of the standard one - however, they’ll do that with traditional and jumbo loans as well now.


Couple things false (per usual on this website like i mentioned before), owning a home is absolutely NOT a liability. It is literally called an asset lol like idk how else to explain that. Your home increases in value which in turn increases your net worth = asset.

Second, a doctor loan has the benefit of NOT counting your student loans against you. I have no idea what bank you go through but its part of the benefit of that type of loan is they understand you have student loans, but also know you will pay if back with the high doctor salary.

Source: I just bought a house with a doctor loan, and would not in a million years put 20% of my money down instead of 0 or 5%. The downpayment money you save could be use to invest, pay down student debt (which is an actual liability), etc.
 
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batman12345

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Couple things false (per usual on this website like i mentioned before), owning a home is absolutely NOT a liability. It is literally called an asset lol like idk how else to explain that. Your home increases in value which in turn increases your net worth = asset.

Second, a doctor loan has the benefit of NOT counting your student loans against you. I have no idea what bank you go through but its part of the benefit of that type of loan is they understand you have student loans, but also know you will pay if back with the high doctor salary.

Source: I just bought a house with a doctor loan, and would not in a million years put 20% of my money down instead of 0 or 5%. The downpayment money you save could be use to invest, pay down student debt (which is an actual liability), etc.

A house that is your primary residence is a liability, not an asset. A liability takes money out of your bank account, like a mortgage/house debt that must be paid monthly.
 

FutureDent020

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Source: I just bought a house with a doctor loan, and would not in a million years put 20% of my money down instead of 0 or 5%. The downpayment money you save could be use to invest, pay down student debt (which is an actual liability), etc.
Sounds situational so I’m going to present you a scenario. If you are purchasing a house $700K or over, which isn’t unreasonable for our profession or anyone who is using the Dr. loan, would still recommend 0-5% down payment? Even if you had the equity to put $100-200k down? Rates are good right now, and I agree your money is better in the market, but less money borrowed is less interest paid and more money in your pocket to invest as you go.
 

Blackca3

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Sounds situational so I’m going to present you a scenario. If you are purchasing a house $700K or over, which isn’t unreasonable for our profession or anyone who is using the Dr. loan, would still recommend 0-5% down payment? Even if you had the equity to put $100-200k down? Rates are good right now, and I agree your money is better in the market, but less money borrowed is less interest paid and more money in your pocket to invest as you go.

But that money is already in your pocket to invest. The interest rate on the home loan would be significantly less than rate of return you could get on the market. More money paid down means less money you could have invested from the start. Time is a huge factor in growing your money.
At the end of the day though you gotta pick the risk level you are comfortable with. Stress from debt can sometimes out weigh the level of relief you get from your returns.
 
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FutureDent020

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But that money is already in your pocket to invest. The interest rate on the home loan would be significantly less than rate of return you could get on the market. More money paid down means less money you could have invested from the start. Time is a huge factor in growing your money.
At the end of the day though you gotta pick the risk level you are comfortable with. Stress from debt can sometimes out weigh the level of relief you get from your returns.
100% agree with all that. Thanks for your input.
 
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allDAT

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Couple things false (per usual on this website like i mentioned before), owning a home is absolutely NOT a liability. It is literally called an asset lol like idk how else to explain that. Your home increases in value which in turn increases your net worth = asset.

Second, a doctor loan has the benefit of NOT counting your student loans against you. I have no idea what bank you go through but its part of the benefit of that type of loan is they understand you have student loans, but also know you will pay if back with the high doctor salary.

Source: I just bought a house with a doctor loan, and would not in a million years put 20% of my money down instead of 0 or 5%. The downpayment money you save could be use to invest, pay down student debt (which is an actual liability), etc.

I’ve gone through US Bank and BOA’s Dr. Loan Program. Both take your IDR payment and calculated it into your backend ratio. BOA actually declined the IDR payment in their Dr. loan calculation and used 1% of the balance/month (BOA did that in 2017, and I don’t believe they would post 2018 as Fannie/Freddie changed some rules regarding 1% vs IDR calculations but I’m not sure).

Primary residence is a liability not an asset. Assets have cash flow, liabilities do not. The primary residence’s ROI depends on appreciation, but all of us need to live somewhere so the idea that you can use the property as a saving account is often not true when you run the numbers because most home owners will roll the equity into their next residence. Considering property taxes, major repairs, upgrades/remodels, HOA dues, and general upkeep (like landscaping, painting, etc) most primary residencies are a break even at best when you really zoom out and look at the numbers. Even when you do have a significant amount of appreciation, when you go to capture that value you often lose it because the equity is rolled into your next residence assuming you are staying in the same neighborhood/county because if your house appreciated, so did your neighbors’.
 
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