Purchasing a home you can afford
Despite the reduction in housing prices over the past few years, a home is almost always one of the biggest purchases you’ll make in your lifetime. That’s why it’s important to do your research before you buy a home—including making sure you can actually afford the monthly payments.
What percent of income should you spend?
Most experts recommend you spend no more than 25 – 35 percent of your income on housing. That figure includes not just the mortgage but also insurance, taxes and maintenance. (Maintenance alone may cost one to two percent of the appraised value of the home each year.)
Some lenders may encourage you to spend more. But just because you can get approved for a high loan amount doesn’t mean you should do it. For most people, spending more than 25 - 35 percent of their income on housing means there’s not enough money left over for other financial goals—such as retirement, college or vacations.
Run the numbers
Home Financing Calculators
Get help determining how much house you can afford.