So, you’re starting to look at homes online, but lets be honest, you have no idea what you can afford. If you are simply scrolling to get an idea of what is out there, you might be looking in price ranges above your means.
Why is this a bad place to start?
Because once you start looking in your price range you could be disappointed with what your options are..
Let’s break it down to help you get an estimate of what you could afford in monthly mortgage payments.
We are going to use the 28/36 rule:
🏠 Housing Expense Ratio (28%): Keep your housing expenses (mortgage, property taxes, homeowner’s insurance) within 28% of your gross monthly income.
💳 Debt-to-Income Ratio (36%): Expand your financial horizon by ensuring your TOTAL debt payments, from housing to credit cards, car loans, and student loans, don’t cross 36% of your gross monthly income.
But, you have to remember - these percentages are just general guidelines.
Each household has a different financial situation. Some may be comfortable placing a larger chunk of their income towards housing, while others might prefer less.
If you know you enjoy shopping more than most, make sure you keep that in mind while making your calculations. 😉
You must consider...savings goals, lifestyle, and other financial responsibilities when deciding on an appropriate amount for your home 🤗
A budget that includes all your expenses, savings goals, and income sources will provide a more accurate picture of what you can comfortably afford.
Still not sure how to figure out YOUR numbers? That’s what we’re here for!!
If you’re looking to buy a home and want to understand what it means for your budget, reach out today! We will navigate this journey with you and open the doors of homeownership!