To determine 'how much house can I afford', the standard rule is that your monthly expenses should not exceed 36%. The 36% rule is based on dividing your monthly mortgage payments and other monthly debt payments by your gross monthly income.
Key factors in calculating affordability are:
We'll provide you with an appropriate price range based on your situation. Most importantly, we'll take into account all your monthly obligations to determine if a home is comfortably within reach.
It’s also important to plan for the future. Consider creating a savings plan for upcoming life events, such as having a child.
When banks evaluate your affordability, they only take into account your outstanding debts. They do not take into consideration if you want to set aside $250 every month for your retirement or if you're expecting a baby and want to set aside additional funds. NerdWallet's Affordability Calculator helps you easily understand how taking on a mortgage debt will affect your expenses and savings.
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