Some experts stretch this to 4x or 5x income if you have zero debt and a large down payment. 2. The 28/36 Rule (Standard Lender Guideline)
To work backward from a comfortable monthly payment to a purchase price: Example: If you want to pay $2,400 a month: home price. Practical Steps to Calculate on Paper: What is the 30/30/3 Rule for Home Buying? how expensive of a house can i buy
The house price should not exceed three times your annual gross income. 4. The "Divide by 0.008" Rule (Quick Payment Estimate) Some experts stretch this to 4x or 5x
Spend no more than 30% of your gross monthly income on your mortgage payment. Practical Steps to Calculate on Paper: What is
Lenders use these percentages to determine your ratio.
Your total monthly debt payments (housing costs + car loans, student loans, credit cards) should not exceed 36% of your gross monthly income. 3. The 30/30/3 Rule (Conservative Safety Net)