80% median income restriction

Home Forums Purchase Program 80% median income restriction

Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #33763
    pratik
    Member

    Hi there,

    I was told that if I earn higher than 80% median income, then I cannot buy a house that is higher than a certain purchase price. However, if I earn lower than 80% median income, then such cap does not apply and I can buy a home higher than that purchase price (as long as I can afford it with my 31% of monthly income as mortgage payment, obviously). How much truth there is to this? I am getting different views. I heard from someone else that you can buy a house of any price (as long as it does not have a purchase price cap), as long as that house does not have a cap. That is, if I earn $200K, I can buy a house with monthly mortgage of $5200 (31% of monthly income) with no issues.

    Many thanks,
    Pratik.

    #33767
    TTrumble
    Member

    Hello pratik,

    The 80% of median income restriction is accurate, but it is only part of the story. If your income is above 80% of the median income for your metro (MSA), then regional purchase limits (maximum acquisition cost) will apply. If your income is below the 80% mark, the regional limit is removed.

    However, if you are going to buy in a Census Tract where the average income is below 80% of the median for your MSA, there is no purchase limit regardless of income.

    Your specific affordable payment amount still applies in both cases.

    (Folks, please don’t bombard me with questions about specific MSA’s and Census Tracts. Those MUST be directed to your counselor.)

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #33775
    pratik
    Member

    Many thanks Tim,

    Indeed very helpful and made me now crystal clear about what my counselor was trying to convey me. Is there any online resources where I can find out location of Census Tract where median for my MSA? I am sure my counselor has to look it up somewhere to make such determination on the property that I want to buy! The reason I am asking it is because this will save me and my counselor a lot of back-and-forth and therefore time and effort on which property I should buy (and importantly which ones to avoid, as it does not belong to a Census Tract where average income is below 80% of my MSA), should I have a higher than 80% of median income for my metro MSA.

    Thanks again, Pratik.

    #33777
    TTrumble
    Member

    Hello pratik,

    All I can tell you for certain is that the MSA is determined by the the Federal Financial Institutions Examination Council (FFIEC) and the Census Tract is of course the realm of the Census Bureau. Their websites are http://www.ffiec.gov and http://www.census.gov respectively.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #33912
    pratik
    Member

    Many thanks Tim!

    Very useful – for those who got lost in navigating the website (I did, initially – as I did not know I was looking for hyperlink to Geocoding/Mapping System!), here is the direct link:

    https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx

    Plug in the address of interest, or just browse through the neighborhood (check box on “User select tract” and drop down “Census demographic data”) and find out which neighborhood is showing low/moderate tract income level. These are the neighborhoods that do not have caps on maximum purchase price (unlike upper/middle tract income level neighborhoods). Demographics keep changing and if you find a right spot at a right time, you can actually luck out through NACA with lowest interest rate, buydown and no purchase price caps – only limit is 31% of your own monthly income (or 33% if you are paying rent of that amount of higher)! (and since geomaps do show income level, it obviates the need to go to census.gov website – correct me if I am wrong).

    Best wishes,
    Pratik.

Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.