Readers, can you help with this question? Another reader wants to know if he’ll be able to buy a home or condo right after graduating from college this year. He’ll be armed with a degree in accounting, already has a job lined up, and will have $30k in student loan debt. I’ll share my thoughts below, but I know some people out there who did buy homes right after school, and I’m curious to know how it went.
I think your ability to a purchase a home straight out of college depend upon a few factors. Certainly you will need to have good credit. The question, when you’re around 21, 22, 23, is have you had a credit card or two open throughout college and always paid them on time? Then your credit should be OK. If you haven’t opened enough credit though, getting a mortgage these days may be tough. And, with such a short credit history, even one late payment could foil your score.
Second, how much are your monthly student loan payments as a percentage of your monthly income? Less than 10% you should be fine. Possibly even 20% if you have no other debt. Next, do you have a down payment? I don’t know that it’s absolutely necessary if your credit is excellent, but I have heard that it really helps these days to have as much as 20% down.
Finally, will your salary qualify you? You need to make a certain amount to even be considered for a mortgage. Here in Boston that was, until recently, hard to do on a single income–let alone a single entry level salary. Then again, the recessed housing market has lowered purchase prices and made affording a modest condo with reach. Also, I’m a journalist, not an accountant, so it’s possible your first gig will pay a healthy bit more than any of mine to date! A good tool for seeing what you can afford is CNN/Money’s affordable home calculator.
That’s about all I can think of–again, did anybody buy a house or condo right after college? How’d you do it? What do you recommend?