Finding a home at the right price can have big benefits for your financial future. The first step is finding out how much you can reasonably afford without putting your other financial goals at risk.
A good rule of thumb is the 28/36 method. First, calculate your gross income (pre-tax) for the year. Then, multiply that figure by .28 to find 28%. That number is the max you should spend on housing. Next, find 36% by multiplying your gross income by .36. That figure is your maximum spend on recurring debt—things like car loans, student loans, and credit cards.
If you stick to this strategy, you will be left with about 36% of your income left for basics such as groceries and transportation as well as savings, fun money, and more.
Buying a new home is exciting, and it should provide you with a sense of stability and financial security. With hard work and careful planning, there’s a good chance you can reach all your financial goals.
If you’re ready to explore your options, get in touch with a Loan Officer in your area today.