Roadmap to Homeownership
There is no “one-size fits all” answer to this question.
The price of the home you can afford is related to your income but can vary based on many factors, including – how much you are borrowing, the size of your down payment, the type of loan you are applying for, current interest rates, real estate taxes, cost of homeowner’s insurance, homeowner’s association fees, and your other monthly liabilities.
As a general guideline, people with good credit and low non-housing debts can afford a home priced at 2.75 to 4.0 times their GROSS (before taxes) annual household income. For example, a household making $60,000 per year might be able to afford a home between $165,000 and $240,000.
However, be aware that everyone’s situation is unique and that some automated online approval system may suggest you can afford payments well beyond your level of comfort. For that reason, there is great value in having an in-person conversation with a licensed mortgage professional or housing counselor; as opposed to only seeking out online sources to discover your ideal home purchase range.
For more information on this subject, please watch:
Link to: MCPHO- “Understanding Mortgage Loans” video with Jerome Scarpello and Mike Thompson at 7:16