Archive for July, 2013
When it comes to buying your first home, that question is not nearly as straightforward as you might think.
There are many so-called “golden rules” that determine how much house you can afford, and these are what your bank uses to decide whether or not to grant you a mortgage. Here are the two most prevalent rules:
1. Your monthly housing costs (mortgage principal+interest+property taxes+insurance) should not exceed 28% of your gross monthly income.
2. Your debt-to-income ratio should not exceed 36% of your gross monthly income, meaning that your monthly housing costs plus any other payments on debt you may have should equal more than 36% of your income.