Example – If You placed a 50% down-payment and secured a 5 year fixed rate at 2.99%, you would have to qualify on a rate of 4.99% (2.99% + 2% = 4.99%) OR the posted benchmark rate.
This would result in reducing the mortgage amount you would qualify for, therefore reducing the potential purchase price for a new home. On average this would bring down your buying power by approximately 14%-20%.
Buying power before and after January 1, 2018
Buyers have a household income is: $120,000 per year.
- A down payment of up to $180,000 (if you are putting at least 20% down)
- $120K Annual Income/20% down
- 5 year fixed rate, 2.99%
- A 30 year amortization.
= Max Purchase Price $900K
With a down-payment of $180K = MAX MORTGAGE $720K
After Jan. 1, 2018:
- 5 year fixed rate, 2.99% + 2% = 4.99% OR posted benchmark rate (whichever is greater)
- A 30 year amortization
= Max Purchase Price $800k
With a down-payment of $180K = MAX MORTGAGE $620K