[Acehawk74]

Using 33% as your living expenses on 25k.. that gives you the following:

Assuming a net income of $25,000 a year
Montly income = $2083.30
33% of Monthly income = $687.50

By maintaining that ratio, you should be spending $687.50 of your income monthly on living expenses. Without getting too detailed, lets just assume that half of your expenses is your mortgage+insurance

Mortgage Payment = $343.75

Now.. with this payment, at a 5% APR, you could afford a house costing - $64034.

That's a generous rate, especially since the buyer is most likely young. Additionally that house price is WAY to low to be something worth buying, unless you are looking into investment opportunities, or other ventures, not a great scenario here to buy at this point.


Although the savings look nice, and the 10% down (which wasn't added into the calculations) I would agree with everyone else in saying that perhaps the potential buyer should improve thier situation financially, by either getting a signifigant down payment, or improve the income/education etc..

Hope this helps, and please anyone feel free to dispute/correct my math, its very late, and errors are possible, but the general idea is there.