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The 28% rule states that you should spend **28% or less** of your monthly gross income on your mortgage payment (e.g. principal, interest, taxes and insurance). To determine how much you can afford using this rule, multiply your monthly gross income by 28%.

The rule is simple. When considering a mortgage, make sure your: **maximum household expenses won't exceed 28 percent of your gross monthly income**; total household debt doesn't exceed more than 36 percent of your gross monthly income (known as your debt-to-income ratio).

If you were to use the 28% rule, you could afford a **monthly mortgage payment of $700 a month** on a yearly income of $30,000. Another guideline to follow is your home should cost no more than 2.5 to 3 times your yearly salary, which means if you make $30,000 a year, your maximum budget should be $90,000.

You can afford a **$225,000 house**.

According to Brown, you should spend **between 28% to 36% of your take-home income** on your housing payment. If you make $70,000 a year, your monthly take-home pay, including tax deductions, will be approximately $4,530.

Senator Elizabeth Warren popularized the so-called "50/20/30 budget rule" (sometimes labeled "50-30-20") in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to **divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings**.

The **28%** rule states that you should spend 28% or less of your monthly gross income on your mortgage payment (e.g. principal, interest, taxes and insurance). To determine how much you can afford using this rule, multiply your monthly gross income by 28%.

"House poor" is a term used to describe **a person who spends a large proportion of his or her total income on homeownership, including mortgage payments, property taxes, maintenance, and utilities**.

A Critical Number For Homebuyers

One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, **your mortgage payment shouldn't be more than 28% of your monthly pre-tax income and 36% of your total debt**. This is also known as the debt-to-income (DTI) ratio.

Many people believe that closing broke is part of the “price” that you have to pay for buying a home, particularly the first time. However, **being broke is a situation you should avoid at all costs, and you usually can.**

The ratio of house poor homeowners is far from uniform across the country—the highest proportions of house poor homeowners are found in Northeastern cities, closely followed by cities in the West. California ranks highest in this unfavorable statistic with **32 percent** of owned households considered cost-burdened, which ...

To purchase a $300K house, you may need to make **between $50,000 and $74,500 a year**. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, the type of home loan, loan term, and mortgage rate.

1. **Multiply Your Annual Income by 2.5 or 3**. This was the basic rule of thumb for many years. Simply take your gross income and multiply it by 2.5 or 3 to get the maximum value of the home you can afford.

What income is required for a 200k mortgage? To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of **$62,000 annually**. (This is an estimated example.)

**Yes, saving $2000 per month is good**. Given an average 7% return per year, saving a thousand dollars per month for 20 years will end up being $1,000,000. However, with other strategies, you might reach over 3 Million USD in 20 years, by only saving $2000 per month.

Fast answer: A general rule of thumb is to have one times your annual income saved by age 30, **three times** by 40, and so on.

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just **take the number 72 and divide it by the interest rate you hope to earn**. That number gives you the approximate number of years it will take for your investment to double.

Based on a standard work week of 40 hours, a full-time employee works 2,080 hours per year (40 hours a week x 52 weeks a year). So if an employee earns $40,000 annually working 40 hours a week, they make about **$19.23 an hour** (40,000 divided by 2,080).

The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a **$120,000 to $150,000** mortgage at $60,000.

When attempting to determine how much mortgage you can afford, a general guideline is to multiply your income by at least 2.5 or 3 to get an idea of the maximum housing price you can afford. If you earn approximately $100,000, the maximum price you would be able to afford would be **roughly $300,000**.

Assuming the best-case scenario — you have no debt, a good credit score, $90,000 to put down and you're able to secure a low 3.12% interest rate — your monthly payment for a $450,000 home would be $1,903. That means your annual salary would need to be **$70,000 before taxes**.

The Income Needed To Qualify for A $500k Mortgage

A good rule of thumb is that the maximum cost of your house should be no more than 2.5 to 3 times your total annual income. This means that if you wanted to purchase a $500K home or qualify for a $500K mortgage, your minimum salary should fall **between $165K and $200K**.

House rich, cash poor is **the term used when a homeowner has equity built up in their home but is burdened by expenses that eat up most or even all of their budget**. While they may have untapped equity in their property, they are unable to access it while their lifestyle or personal debt grows at an unsustainable rate.

**No, renting is not a waste of money**. Rather, you are paying for a place to live, which is anything but wasteful. Additionally, as a renter, you are not responsible for many of the costly expenses associated with home ownership. Therefore, in many cases, it is actually smarter to rent than buy.