When you are starting the home buying process, the first question most people ask is: “How Much House Can I Afford?”
28% of your income is the maximum amount you should spend on your house payment.
Many first time homebuyers are in the dark when it comes to what they can afford. They know they are ready to stop paying rent or move into something they can call their own, but unsure of how much they can actually commit themselves to for the long-term duration of a mortgage. Many buyers start their research online using affordability calculators, others rely on how much the bank is willing to lend. Be cautious, banks tend to be willing to lend more than what you can comfortably afford. Educating yourself first is the best tool.
How Much Can I Comfortably Dedicate To Pay Each Month? 
Often, the best strategy for determining home much home you can afford is to work backwards by deciding how much you are willing to pay each month. Many mortgage lenders advise sticking to a payment that is between 25-30% of your gross income. However, sticking to no more than 28% is recommended.
Use the table above to get a quick general idea of your maximum house payment based on your income. Don’t forget to factor HOA fees, PMI, and if you will be escrowing your homeowners insurance and property taxes into your payment.
Remember: Banks will also factor in monthly debts such as monthly credit card payments, monthly student loans, car payments, monthly child support, alimony, etc. Items such as utility payments are not factored in. These monthly debts will be included in that 25-30% of your gross income limit.
Let’s take a look at a quick example:
The only reliable way to determine how much house you can afford is by adding all of your monthly bills and expenses. Don’t forget- homeownership can come with additional costs you may not have had before such as: lawn maintenance, pest control, pool maintenance and general home maintenance. A general estimate can be made, but for more specific amounts, contact your local service providers or real estate agent.
When adding up your monthly expenses, also include your 
cost of living – gas, groceries, entertainment, and savings contribution. Adhering to a budget and including a savings plan is especially important when owning a home, because you never know when an unexpected expense can arise. Don’t let that unexpected water heater dying leave you in a pinch!
Read the full article here.
Amanda McNew
(772) 663-2823
amanda@movetovero.com
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