How do I know how much home I can afford?
• Most experts recommend using the 28/36 rule which means you shouldn’t spend more than 28% of your gross monthly income on housing and 36% on total debt (including your mortgage, credit cards, and other loans like auto and student loans).
• For example, if your salary is $75,000 per year, your gross monthly income is $6,250 ($75,000 divided by 12). Your total housing costs (principal, interest, taxes, and insurance) shouldn’t exceed $1,750 per month (28% of $6,250).
• Keep in mind the 28/36 rule is just a general guideline. Adjust the percentages to your own comfort level and financial goals.
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