To begin with, how much house can i afford in florida? It’s a great question, and we appreciate you asking it.
How much of a mortgage you are eligible for ultimately determines the type of home you can afford. In order to calculate that, lenders will use a variety of ratios and variables.
And while we can’t go over every one of them here, we can give you a general idea of what to anticipate.
In order to fully prepare for your search for your ideal Florida home, be sure to get in touch with us for a thorough analysis of how much mortgage you can afford.
For more specific information, keep reading.
Table of Contents
What Florida Home Price Range Can You Afford?
The amount of house you can afford in Florida depends on a wide range of factors. So before you get started on your home search, let’s figure out what your budget should be based on these factors and calculations:
Factor 1: Your Income
In Florida, your income is taken into account first when determining how much house you can afford. Generally speaking, you shouldn’t be able to afford a house that costs more than three times your annual salary. As a result, if your yearly income is $100,000, you should search for homes that are around $300,000.
Factor 2: Your Debts
Your debt is taken into account as the second element when figuring out how much house you can afford in Florida. You would be able to spend your entire paycheck after taxes in an ideal world.
Nevertheless, some of that money is actually used to cover the recurring credit card, auto, and student loan debt payments.
Calculate Your Debt-To-Income Ratio
You must figure out your debt-to-income ratio in order to better understand how your monthly debt payments stack up against your monthly income.
The DTI ratio is used by lenders to calculate how much you can borrow in accordance with the 28%/36% rule. This rule states that no more than 36% of your gross monthly income should be used to pay off debt, and no more than 28% should be used to cover housing expenses.
So, if your annual salary is $100,000, you would have a gross monthly income of about $8,333. Let’s also assume that your monthly debt payments total just $200 for your car and $100 for student loans.
If you first calculate your debts at $300 per month, they represent just 3.6% of your monthly gross income. From there, you should be able to afford to pay up to $2,333, or 28% of your gross monthly income, toward your mortgage.
It’s critical to remember that just because you can afford to pay a certain amount, doesn’t mean you should. Saving more money each month and having a lower monthly mortgage payment are both positive outcomes.
Factor 3: Your Down Payment
Your down payment is taken into consideration, which is the third element, when calculating how much house you can afford in Florida. It’s always advised to put down 20% of the home’s purchase price, if at all possible. If that isn’t possible, depending on your loan type, you might be able to put down as little as 3%.
Just keep in mind that PMI will result in higher monthly mortgage payments if you put down less than 20%. Private mortgage insurance, or PMI, is a tool used by mortgage lenders to lessen some of the risk associated with lending money to borrowers with low down payments.
You will typically pay for PMI with an annual cost of 1% of your mortgage. You can stop paying PMI once your home equity reaches 20%.
Let’s say you paid $300,000 for a house, but you only put down the required 3%, or $9,000 in total. This leaves you with a $291,000 mortgage loan, a PMI cost of just under $3,000 annually, and a monthly PMI cost of roughly $250.
Factor 4: Your Interest Rate
Your interest rate is the fourth consideration in figuring out how much house you can afford in Florida. You will undoubtedly pay thousands of dollars in interest over the course of your loan because borrowing money isn’t free.
It’s important to keep in mind that interest rates vary depending on the type of loan you’re applying for and your financial situation. Compared to 30-year loans, 15-year loans have lower interest rates, and adjustable-rate loans frequently have lower initial interest rates than fixed-rate loans.
Additionally, credit scores over 740 qualify for the lowest interest rates, and the lower your credit score is, the higher your interest rate will be as lenders use this to help offset the risk they take by lending to a person with bad credit.
With a credit score of over 740, you can therefore anticipate paying 2.589% in interest for a 15-year fixed-rate loan in Florida. With the same credit profile, you can anticipate paying just under 3.4% in interest for a 30-year fixed-rate loan.
An interest rate of 3.834% for a 30-year fixed-rate loan and 2.598% for a 15-year fixed-rate loan are what you can anticipate paying if your credit score is between 680 and 699 (the average credit score is 698).
Housing Expenses: Calculate Property Taxes And Homeowner’s Insurance Premium
You must also consider the other elements of your monthly mortgage payment, such as property taxes and homeowner’s insurance, after you have deducted your principal and interest.
To pay for things like schools, roads, parks, and emergency services, your county levies property taxes. Although the precise property tax rate varies by county and even by home value, in Florida you can anticipate paying less than 1% annually. You will have to pay $3,000 a year, or $250 a month, if your home is worth $300,000.
Lenders mandate homeowner’s insurance because it safeguards your house from harm from calamities, vandalism, or theft. Florida’s higher risk of natural disasters like hurricanes and floods can make homeowner’s insurance more expensive.
Consequently, you should prepare to pay about $1,500 annually or $125 per month for coverage. Remember that your policy’s premium will change depending on your location and the characteristics of your house.
What Can You Buy In Different Parts Of Florida
Florida is a big state with numerous unique neighborhoods and real estate markets, some more expensive and competitive than others.
Now that you have a better idea of what you can afford to spend on a house in Florida, let’s take a look at some of the different real estate markets throughout the state to see what you can afford in different cities:
Miami
The average cost of a home in Miami is $465,200 when it is listed for sale, and it sells for $440,000 on average. In Miami, you should budget $345 per square foot on average. Due to the low inventory and strong demand from both domestic and foreign homebuyers, the Miami real estate market is still competitive and is regarded as a seller’s market.
Fort Lauderdale
The median listing price of a home in Fort Lauderdale is $499,000, while the median sold price is $440,000. In Fort Lauderdale, you should budget $361 per square foot on average. Since there are more buyers than there are homes available, the market in Fort Lauderdale is regarded as a seller’s market.
West Palm Beach
The median price of a home in West Palm Beach is $325,000 for a listing, and it costs $351,500 to sell one.
In West Palm Beach, you can most likely anticipate paying about $225 per square foot. With supply and demand in balance and homes typically selling for 1.22% less than the asking price, the West Palm Beach real estate market is regarded as stable.
Tampa
The median home price in Tampa is $350,000, and the median listing price is $355,000. In Tampa, the average price per square foot is roughly $229. Homes typically sell for the asking price or more in Tampa’s market, which is regarded as a strong seller’s market.
Clearwater
The median listing price of a home in Clearwater is $330,000, while the median sold price is $320,000. In Clearwater, you can typically expect to pay around $232 per square foot. Clearwater’s housing market is regarded as being strong for sellers, similar to Tampa’s, with most homes selling for the asking price or more.
Sarasota
The median home price sold and listed in Sarasota is $420,000 and $450,000, respectively. In Sarasota, on average, you can anticipate paying $271 per square foot. A strong seller’s market is also thought to exist in the Sarasota market.
Fort Myers
The average listing price of a home in Fort Myers is $325,000, while the average sold price is $300,000. In Fort Myers, you should typically expect to pay around $205 per square foot.
The market in Fort Myers is very competitive for buyers because of these reasonably low home prices. You should prepare to pay the full asking price.
Naples
The median listing price of a home in Naples is $566,000, while the median sold price is $521,500. In Naples, the average price per square foot is around $310.
Despite these higher prices, Naples’ real estate market is still a strong seller’s market with plenty of buyers willing to match or exceed the asking price.
Orlando
Orlando has a median listing price of $335,000 and a median sold price of $327,000 for homes. In Orlando, you can typically anticipate to pay around $201 per square foot. The Orlando market is regarded as being quite competitive because of these reduced prices and the local growth.
Jacksonville
Jacksonville’s median listing price for a home is $272,000, while the median sold price is $280,000. The average cost per square foot in Jacksonville is around $168.
Jacksonville’s market is still regarded as a seller’s market even though it isn’t expanding as quickly as markets in other cities. Buyers should be ready to offer the full asking price when they enter the transaction.
Quick Tips
Select your loan’s dollar amount, percentage down payment, and interest rate.
Nearly all online calculators do not have a separate field for HOA (home owners association or condo association monthly fees), so if there is an HOA or any other monthly fee, include that monthly fee in with the Home Insurance field to ensure that you have included all expenses that will be taken into account for loan approval.
The calculators below explain where to add missing fields if you want to include them and they include a variety of fields.
If you are doing at least the 20% down payment then you don’t need to pay PMI insurance because it is only required for loans with less than 20 % down, so just mark that field as “0”.
The real estate property taxes that you see on a listing sheet are determined by the owner’s current tax situation (homestead status or not). This page explains how Florida property taxes are determined. You should budget roughly 1.5% of the purchase price for your new taxes as a general guideline.
The Closing Costs field should be completed as “0”, except if the The mortgage amount must include costs, which typically only applies to VA (Veterans) loans and only if a buyer chooses to do so.
The Amortization Schedule, which displays the breakdown of principal and interest and loan balances annually, is available after you have calculated your mortgage payments.
A yearly payment of.55% of the original loan amount is required for PMI, which has a maximum annual rate of 2.25%. The amount of the down payment, the range of credit scores, and the overall DTI, or debt to income ratio, all affect the rate. Loan term, borrower count, and whether the transaction is a purchase or refinance are additional factors that affect the interest rate. This website has an excellent PMI calculator where you can plug in these variables and get an estimate of what the You should confirm the precise figures with a lender because there are other factors that might have an impact on your loan scenario as a whole.
All online calculators are very simplistic and might be missing crucial data. They are provided to help give you a general idea, please verify with a lender to get the complete details,
Final Words
If you have any questions, please leave a comment.
Thank you for reading.