Here's the super-quick rule of thumb: Most people can afford a home that costs up to three times their annual household income. If you have little to no debt and can put 20% down you can probably buy a house worth close to four times your annual income.
Example: If you and your spouse together make $60,000 a year (which was the median household income for first-time homebuyers in 2009), you can probably buy a $180,000 home if you have moderate debt (debt payments of <12% of your income), and a $240,000 home if you have little or no debt and can make a 20% down payment.
If you're single and make $35,000 a year, then you can probably afford only about a $105,000 home. But in most parts of the country, you can't buy homes that cheap. Single people have a tough time buying homes unless they make an above-average salary. Marriage allows a couple to combine their incomes to better afford a home.
The first concept for figuring how much home you can afford is pretty simple. Since you pay for your house with a combination of a down payment and a bank loan, the total of both is the cost of the home:
Here is a site with even more information
Author:Brandi Rademacher Phone: 253-224-6663 Dated: August 15th 2011 Views: 2,012 About Brandi: Brandi Rademacher with RE/MAX Realty South is the Professional Realtor who other Realtors come to fo...
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