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 14th 2011 Views: 1,977 About Brandi: Brandi Rademacher with RE/MAX Realty South is the Professional Realtor who other Realtors come to fo...
View our latest blog posts in your RSS reader. Click here to access.
RE/MAX Realty South real estate brokerages employ full time, highly productive, experienced and educated brokers focused on serving their real estate clients and communities at the highest possible level to create the best possible result...even in these rapidly changing times and uncertain economy. We provide accurate, detailed information, data and advice so that our clients make informed decisions. We're committed to life long relationships founded in integrity and mutual respect. We're here to help...at all stages in all situations.