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This rule states that you shouldnt spend more than 28% of your gross monthly income on your mortgage.
We will use this rule when determininghow much income you should probably afford a home.
How Much Do it’s crucial that you Buy a $250,000 House?
Using the 28% rule, you should probably earn $4,768 per month.
That comes to $57,216 per year.
A higher down payment makes the monthly payments more affordable and will provide some additional breathing room.
However, it gets more difficult to make a 20% down payment as housing prices increase.
How Much Do you gotta Buy a $500,000 House?
Youll have to make $9,532 per month, or $114,384 per year, to afford the house.
However, making a 20% down payment requires that you have $100,000 ready to go.
Its more likely to only make a 10% down payment, which comes to $50,000.
If you make that down payment, your monthly mortgage payment goes up to $3,003.
Youll need to earn $10,725 per month, or $128,700 per year, excluding PMI.
How Much Do you’re gonna wanna Buy a $1 Million House?
Youll need $200,000 in your bank account just to make a 20% down payment.
To keep up with the mortgage using the 28% rule, you should earn $19,068 per month.
That comes to $228,816 per year.
That comes to an annual income of $257,400.
How To Afford More House
These calculations made several assumptions.
The first assumption is that you would receive a 7.03% APR over a 30-year fixed-rate mortgage.
Boosting your income is the best way to afford a larger property.
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