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How much house can I afford?

Use the 28/36 rule to calculate how much house you can afford this involves home-related costs and total debts.
how-much-house-you-can-afford

Ever wonder how much house you can afford? Let's break it down in sixty seconds.

How we calculate how much house you can afford

Your housing expenses should not exceed twenty-eight percent of your monthly income. That includes your mortgage, property taxes, and insurance. But wait! There's more.

Your total debts, including your new mortgage, car loans, student loans, and credit cards, should not exceed thirty-six percent of your income.

Follow the 28/36 debt-to-income rule

Example: Let’s say you and your spouse have a combined monthly income of $7,000. Applying the 28/36 rule, you wouldn’t want to spend more than:

  • $1,960 on house related expenses ($7,000 x .28)
  • $2,520 on total debt ($7,000 x .36)

Now, take into account all sources of income, yours, your spouse's, and any others. Deduct your fixed expenses and voila!

You've got your available funds for a mortgage.

Create your list of monthly expenses

Remember, this approach ensures you have financial stability for other expenses and savings too. So, don't just dream about your perfect home, make it a reality with this simple trick. Keep these percentages in mind, and you'll be one step closer to unlocking the door to your dream house.

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Disclaimer: Our goal is to provide the most relevant and current information. However, the information is for informational purposes only and is not intended to be personal financial advice.

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