FAQ: How much can I afford?

Buying a home is a numbers game, but it’s also an emotional game. That’s why from the get-go, I encourage buyers to only consider homes they can confidently afford. ⁣

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Setting aside what lenders say, buyers should take the time to “try on” various mortgage payments and find the one that fits the best and feels the most comfortable.⁣

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That said, some guidelines can provide a starting point for answering the question: How much home can I afford?⁣

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Most financial experts say housing expenses should be no more than 28% of your total pre-tax income. This includes your monthly P&I mortgage payment, homeowners insurance and property taxes.⁣

For example, if your salary is $55,000 per year, your gross monthly income is $4,583 ($55,000 divided by 12). Your total housing costs (principal, interest, taxes, and insurance) shouldn’t exceed $1,283 per month (28% of $4,583).⁣

Keep in mind that total debt should be under 36% of your total pre-tax income. This includes housing costs mentioned above and credit cards, car loans, personal loans, and student loans.⁣

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Save this post for later, or share it with anyone you know who has plans to buy this year. And, of course, reach out if I can answer any questions that come up along the way!

Cindy Grenier - 204-330-2567