If you are looking for a home, you will hear that rules of thumb for affording a house are as follows.
There are many factors to consider (current debt, other saving goals) but this is a great rule of thumb to quickly calculate how much home you can afford.
- Conservative: 2.5 your total house-hold income. So, if you are fortunate enough to make $50k/year, look no more than $125k home.
- Aggressive: 3x your total house-hold income. $50k/year = $150k ho
In other words, if you aren’t making $75k/year, don’t even think about a house above $185k unless you are seeking financial trouble.