Understanding your general home buying budget is an important early step in the process. Before you start looking at homes, it can be helpful to get a broad sense of what price range may fit your situation, lifestyle, and comfort level. Because every buyer’s financial picture is different, it is best to speak with a qualified mortgage lender or financial professional for guidance specific to you.
The 28/36 Rule
One common affordability guideline some buyers hear about is the 28/36 rule. This is not a requirement, but it can be a helpful starting point for understanding how lenders may think about monthly payments and debt.
Housing Payment: 28%
This general guideline suggests that a monthly housing payment, including principal, interest, taxes, and insurance, may be around 28% or less of gross monthly income.
Total Debt: 36%
This general guideline also suggests keeping total monthly debt payments, including a mortgage, car loans, student loans, and credit cards, around 36% or less of gross monthly income.
Again, these are only broad guidelines. Your actual budget depends on many factors, including your income, credit, savings, loan type, down payment, interest rate, and personal comfort level.
Make Sure to Factor in All Costs
When thinking about a home buying budget, remember that the purchase price is only one part of the overall cost. There may be upfront costs, monthly costs, and future expenses to consider.
Costs to keep in mind may include:
- Property taxes
- Homeowner insurance
- HOA fees
- Private mortgage insurance
- Moving costs
- Down payment
How Working With a Trusted Realtor Helps
While Vanderlinde Group does not provide financial advice, our team can help you better understand the local housing market, compare homes in different price ranges, and connect you with trusted mortgage professionals when needed. We can also help you focus your search on homes that align with your goals and comfort level.
Contact Vanderlinde Group today to start the home buying process.