Your Housing Payment Should be Maximum 1/3 of your Monthly Income
For a renter, that would be your rent payment plus your utilities. When you become a homeowner, it will include your mortgage, taxes, and insurance, plus HOA fees if required in your new community. Remember to put aside money for ongoing maintenance and repairs.
Your Monthly Debts Should Be No More Than 10% to 15% of your Gross Monthly Income
Debts include student loans, car payments, child support, and consumer debt such as credit cards. Anything that shows up on your credit report, including old bills that went to collection, will be included in the calculation of your income to debt ratio. Maximum 15% is ideal, but most of us have quite a bit more debt than we would like. So I would challenge you to pay off as many debts as possible and put yourself into a better financial position.
Contact your Financial Advisor or Planner for Assistance
Remember that your budget is not set in stone; it will change over time, so allow for flexibility. The bottom line is to monitor your finances, and make adjustments to stay on track to meet your goal. I recommend contacting your financial advisor or planner for assistance. If you do not yet have one, take the time to research 5, interview 3, and select 1 who can help you. A financial planner is a licensed professional who can assist you in reaching your family’s goals.
Read more in our book, "Buy Your First Home", http://tinyurl.com/dy2wjx4.
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