“You can’t fall out of the basement.”  Wise words spoken, and they might well apply today.  Low mortgage rates, low home prices.  If you’re still wondering if you can afford to buy a home, here are some examples to consider.

Veterans using their VA home loan entitlement for the first time might be able to buy a home for $200,000 for about $1155 per month, including taxes and insurance.  At an APR of 3.431 percent for a fixed rate loan, buyer or seller could pay the approximately $4200 needed to close.  Remember that seller gets to pay escrow and pest inspection fees for the buyer.

If you qualify to use the USDA Rural home loan program, we have until late March 2013 until Tehachapi’s status will be re-evaluated.  Since our population has increased according to the 2010 census, we might not be able to use the program after that time.  But today, a $200,000 home runs about $1231 per month, including taxes and insurance.  At an APR of 3.86 percent for a fixed rate loan, buyer or seller could pay the approximately $5900 needed to close.

Using FHA means the buyer gets to contribute 3.5 percent of the price as a down payment, which can be a documented gift from a family member.  In our example of a $200,000 home, the monthly payment including taxes and insurance costs about $1322 per month (4.2 percent APR).  Buyer contributes $7000 down, and buyer or seller can pay the additional $6100 needed to close.

We still have the availability to reduce the amount needed to close by writing your loan at a slightly higher rate, in case the seller isn’t willing or able to contribute.  All these scenarios require good credit and more than two years on the job.  Other qualifying guidelines may exist, and since these are examples for a phantom buyer your figures may differ slightly.

Point being, if you’re paying $1100 – $1300 per month in rent, you should be talking to your local mortgage adviser to see how you might be able to kiss your landlord goodbye.

Tammy Engel is your local Mortgage Advisor and has been writing purchase, refinance, and reverse mortgage throughout California since 1990. See how clients evaluate my service by visiting the “testimonials” page at TammyEngel.com. Or phone 661/822-REAL with your home loan questions.