Question 1

How much house can I afford?

Accepted Answer

Follow the 28/36 rule: housing costs should not exceed 28% of gross income, and total debts should not exceed 36%. For $80,000 income, you can afford about $250,000-300,000 home with $50,000 down payment. Lenders also consider credit score, employment history, and reserves.

Question 2

What is the 28/36 rule?

Accepted Answer

The 28/36 rule is a lending guideline. 28% means your mortgage payment (PITI: principal, interest, taxes, insurance) should not exceed 28% of monthly gross income. 36% means all debts (mortgage, car, credit cards) should not exceed 36%. This ensures affordable payments.

Question 3

How much down payment do I need?

Accepted Answer

Minimum down payments: FHA loans 3.5%, conventional loans 3-5%, VA loans 0% for veterans. However, 20% down payment avoids PMI (private mortgage insurance), saving $50-200 monthly. Larger down payment reduces loan amount, monthly payment, and total interest.

Question 4

What costs beyond mortgage should I budget?

Accepted Answer

Additional costs: property taxes (1-2% of home value annually), homeowners insurance ($1,000-2,000/year), HOA fees ($100-500/month), maintenance (1% of value annually), utilities, and closing costs (2-5% of purchase price). Budget $3,000-5,000 monthly for total homeownership costs on a $300,000 home.

Question 5

Can I afford a house with student loans?

Accepted Answer

Yes, but student loans affect your debt-to-income ratio. Lenders count student loan payments in the 36% total debt limit. Income-driven repayment plans may help qualify if the calculated payment is lower. High student debt may require higher income or lower home price target.

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