Skip to main content
FamilyEducation
FamilyEducation
Family Education

FE-Menu

  • Pregnancy
    • <blank>
      • Pregnancy Tracker
      • Trying to Conceive
      • Signs & Symptoms
      • Pregnancy Health
    • <blank>
      • Baby Names
      • High Risk Pregnancies
      • Preparing for Baby
    • <blank>
      • Concerns & Complications
      • Labor & Delivery
      • Postpartum
  • Baby Names
    • <blank>
      • Browse All Baby Names (A-Z)
      • Top Names for Boys
      • Top Names for Girls
      • Baby Name Generator
    • <blank>
      • Baby Name Lists & Ideas
      • First Names By Origin
      • Browse All Last Names (A-Z)
      • Last Names by Origin
  • Babies
    • <blank>
      • Caring For Your Baby
      • Baby's Health
      • Feeding Your Baby
    • <blank>
      • Your Baby and Sleep
      • Baby's Growth & Development
      • Baby Hygiene
    • <blank>
      • Baby Safety
      • Baby Products
    • <blank>
  • Toddlers
    • <blank>
      • Toddler Growth and Development
    • <blank>
      • Toddler Behavior and Discipline
    • <blank>
      • Your Toddler and Sleep
  • Kids
    • <blank>
      • Health
      • Childhood Development
      • Fitness & Nutrition
      • Childhood Safety
    • <blank>
      • Communicating with Your Kids
      • Childhood Behavior and Discipline
      • Fostering Responsibility
      • Instilling Values & Manners
    • <blank>
      • Childcare
      • Neurodiversity in Kids
      • Adopting Children
  • Teens
    • <blank>
      • Teen Health
      • Teen Puberty & Sex
    • <blank>
      • Behavior & Discipline
      • Teen Social Development
    • <blank>
      • Values & Responsibilities
  • Activities
    • <blank>
      • Printables
      • Indoor Activities
      • Learning Activities
      • Arts and Crafts
      • Performing Arts
      • Food Activities
      • Outdoor Activities
    • <blank>
      • Books
      • TV
      • Movies
      • Online
      • Quizzes
      • Games
      • Celebrities
    • <blank>
      • Parties
      • Travel
      • Toys
      • Holidays
      • Gifts
  • Learning
    • <blank>
      • By Grade
      • By Subject
      • College
      • Preschool
    • <blank>
      • Back to School
      • Study Skills
      • Learning Styles
    • <blank>
      • Homeschooling
      • Parental Involvement
      • Your Child's School
  • Family Life
    • <blank>
      • Mom Life
      • Dad Life
      • Family Relationships
      • Having a Healthy Marriage
      • Divorce
    • <blank>
      • Health & Fitness
      • COVID Resources
      • Managing Your Home
      • Moving Your Family
      • Pets
    • <blank>
      • Family Finances
      • Work
      • Families and Food
  • NewslettersNewsletters
    Newsletters

Breadcrumb

  1. Home
  2. Family Life
  3. Managing Your Home
  4. How Much House Can You Afford?

How Much House Can You Afford?

Take time to read about a few things you should know before buying a house.
  • facebook share icon
  • pin
  • twitter share icon
  • email share icon
  • Print page icon

In this article, you will find:

  • Page 1
  • Page 2

Page 1

How Much House Can You Afford?

To buy a house, one of the first things you must do is determine just how much house you can afford. You need to know how large a loan, or mortgage, you'll be able to get.

Before you apply for a mortgage, you need to get your finances in order. To improve your chances of getting the mortgage you want, do the following things:

  • Reduce your debt. Pay off as much debt as you can before you even start shopping for a mortgage. That includes credit cards, car debts, and any other debts you might have.
  • Start getting some money together for a down payment. We discuss down payments in more detail later on. For now, we'll just say that the more you have for your down payment, the less you'll have to finance on your loan.
  • Patch up any glitches on your credit rating or get some credit established—fast!

How Much Do You Make?

To determine how big a mortgage you can probably get, the first thing to look at is how much money you make, before taxes. This amount is your gross income. The recommended guideline is that you should spend no more than 28 percent of your gross monthly income on your mortgage payment. (If you're not sure exactly what your monthly income is, gather up your last couple of pay stubs and figure it out. Or divide your gross annual income by 12 to get the figure.) The mortgage payment includes the principal, interest, real estate taxes, and homeowners insurance.

Pocket Change

Some financial advisors, and many mortgage lenders, will tell you that it's okay to spend more than 28 percent of your monthly income on your mortgage. Many recommend not going higher than 33 percent—some may even go a point or two higher. Remember, however, that many people have made themselves “house poor” by buying a more expensive home than they reasonably could afford.

The principal of a mortgage is the amount loaned. If you borrow $120,000, that amount is the principal, and you are obligated to repay a portion of the mortgage amount each month. You pay principal each month based on the unpaid balance of the mortgage. The interest is the fee the lender charges you to use his money. Real estate taxes are the taxes assessed by the municipality and/or school district within which you live. They're based on the value of your home. And homeowners insur-ance fees are the cost of insurance to protect the property and its contents. The four things are normally figured into each payment you'll make on your mortgage, although the taxes and insurance are sometimes paid separately.

Money Pit

Realtors sometimes will encourage you to buy a home that's more than you're comfortable handling financially. Their reasoning is that, while your mortgage payment will stay the same, your salary is likely to increase, so you're fine to buy a house with a bigger mortgage payment than you'd like. A high mortgage payment can put you into the category of “house poor,” which could force you to cut spending in other areas.

Your Expenses

It seems that every time you turn around, your expenses have increased. When you're thinking about applying for a mortgage, you must pay close attention to your ex-penses as they relate to your income.

Although the recommended maximum for your mortgage payment is 28 percent of your gross monthly income, the recommended maximum for your total monthly debt is 36 percent of your income. That means that all your expenses other than a mortgage, such as your car payment, credit card bills, student loans, child support payments, and other bills, should total no more than 8 percent of your gross income.

Next: Page 2

What's hot

  • Eye color genetic chart Family LifeWhat Color Will My Baby'…
  • 10 Signs of Divorce Family Life10 Signs Your Marriage is Over
  • woman standing on scale Family LifeWhat's a Normal BMI for…
  • Young girl eating a oatmeal with berries after a workout Family LifeCalorie Intake for Weight…
NewslettersNewsletters
Your partner in parenting from baby name inspiration to college planning.
Family Education
FamilyEducation does not provide medical advice, diagnosis or treatment. Your use of the site indicates your agreement to be bound by our Terms of Use and Privacy Policy. Information on our advertising guidelines can be found here.

FE Footer

  • Newsletter Center
  • About Us
  • Privacy Policy
  • Editorial Policy
  • Editorial Team
  • Expert Panel
  • Cookie Policy
  • Site Map
  • Contact Us
  • Advertise
  • Terms of Use
  • Do Not Sell My Info (for CA Residents)
sandbox learning logo
Family Education is part of the Sandbox Learning family of educational reference sites for parents, teachers, and students. 

factmonster logoinfoplease logoTeacherVision logo

sandbbox logo
©2022 Sandbox Networks Inc. All rights reserved. Sandbox Learning is part of Sandbox & Co., a digital learning company.