2 Rules
Although it is early on in your quest to purchase,
it is likely that you have wondered how much home you will be
able to buy. The lender that joined us at our first stop on Finance
St. will help you to determine how much purchasing power you have.
There are several rules of thumb that will give you an approximate
idea of what you will be able to spend.
The first rule states that you can afford a
home with a price tag that is 2.5 times your annual salary. For
example, if your annual salary is $30,000, applying this formula
would mean that you can probably shop for a house with a price
up to $75,000.
The second rule says that you should
be able to use 30% of your gross monthly income (before taxes
and deductions) for a house payment. Assuming, for example, that
your gross monthly income is $4,000 and using this formula as
a guide, you may be able to comfortably afford a monthly payment
of $1,200.
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