How expensive of a house can I afford on 30K?
General rule of thumb is 2x to 3x your annual salary for a mortgage. For you that’s between $64,000 and $96,000. In the past few years Peel the onion back one layer and there is a more detailed formula. The 28/36 rule. Spend no more than 28% of your gross income on a mortgage payment and no more than 36% of your income on your total debt service. These used to be the ratios that banks would use, but in the real estate run up the rules became looser and I would suspect they are tightening back up again. The 28% of your income comes out to be ~$750. The 36% ratio for you is $960 and every debt payment has to fit in under that, mortgage, car payments, student loans, credit card minimums, everything. When figuring your prospective mortgage payment don’t forget homeowners insurance and property taxes. Both of those can vary wildly by area. Live near a coast and the insurance can be very expensive. Live in a rust belt state and your taxes could be brutal. Personally I paid anywhere from $500
