How much house can I afford Rule of Thumb

Remember to always budget higher than the price of the house.

'Rule of Thumb' to how much house you can afford

Browsing the internet you will find lots of different rules of thumb on how much house you can afford according to your annual salary. We have looked at dozens of these sites and the general viscinity of the numbers is that you should be able to afford about 4 times your annual income. Our how much house can I afford? calculator says that you should not spend any more than 28% of your monthly income on your house payment, which extrapolated to an annual income comes out at about 4-5 times your annual income. You should be able to afford 5x your income, but we go with 4x as the rule of thumb for extra safety.

Obviously, each individual circumstance differs and people may have great expenses that may come up in the future to consider. One such expense can be a health issue or the loss of a job. That is why you should always have savings of several months at least, the more the better. One of the best ways to save money is to cut back on spending. Keep a journal of your monthly expenses, you may be surprised that simple things such as coffee can add up to hundreds of dollars. Figure out things that can be cut back on or modified, and you could save thousands, which will allow you to afford more house.

By taking the steps to figuring out what the rule of thumb for house affordability is, you are already ahead of many people that ask friends and strangers how much house they can afford when they should be looking it up themselves and assessing their own financial situation.

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