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Oregon Housing and Community Services

How to determine home sales prices for eligible MIRL housing projects

How do I know if the sales price is affordable? MIRL-funded homes for purchase must be affordable to households with an area median income (AMI) at or below 120%. To calculate the affordable sales price, please follow this guidance:

  1. Identify the income level for which the home will be affordable. Visit the MIRL webpage to find AMI levels for the county in which you are building. Since AMI is based on household size, and there is not a specific homebuyer yet identified, you can make reasonable assumptions about the households who may purchase your home based on your local market and any focus communities. To simplify, you can also base household size on the number of bedrooms using the table below.

  2. Use an online tool to calculate how much mortgage the household can afford. OHCS does not endorse any specific calculator, but some examples include:

  3. Plug in the target area median income for the appropriate household size and the additional information below. Depending on the calculator, you may need to click into an Advanced Settings option to fill in all the information.
    1. Interest rate: Include the most current average mortgage interest rate as of filling out the calculator.
    2. Down payment: You may assume a minimum of 3.5% of the purchase price or $15,000, whichever makes more sense for your local market.
    3. Debt payments: If you are familiar with your market, include what is typical of buyers. If not, the assumptions of the calculator are fine.
    4. Front-end-ratio: This number is the maximum percent of income the mortgage payment represents. This should be no greater than 35%. FHA loans allow 31%; other mortgage products prefer 28%.
    5. Back-end-ratio: This number is the maximum percent of income the mortgage payment and all other debts represent. This should be no greater than 43%, which represents an FHA loan. Other mortgage products prefer 36%.
    6. Property taxes: Fill in the appropriate amount for your area.
    7. Homeowners insurance: Fill in 0.65% of the average home price for the area if you don’t have a specific number.
    8. HOA fees: if applicable
    9. Private mortgage insurance: Assume 0.75% of the average home price in the county.
  4. The output should be within $25,000 of the anticipated sales price. Take a screenshot or print save of the screen including assumptions and calculated sales price to submit along with your MIRL program loan request.