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)
Spend no more than 30% of your gross monthly income on your mortgage payment.
Have 30% of the home price saved (20% for down payment, 10% for closing costs and an emergency buffer).
To figure out how much house you can afford "on paper," you can use a few standard financial "rules of thumb" that lenders and financial advisors use to assess budget safety. 1. The 3x Annual Income Rule (Simplest) This is a quick way to find a target purchase price.