I know there is a formula for it but I can’t seem to figure it out. I can’t remember if it is a percentage you base things on or if there is an equation you do. I just want to get a general idea of how much house I can afford to buy right now.
A good rule of thumb is to not go over 1 week’s pay in mortgage cost. Say you make $3,200 a month. Divided by 4, this gives you $800. That would be a wise number to stay under. This does not include property tax, utilities, or house insurance.
The easiest way to do this is to look at your yearly income and times it by four. If you earn $40k a year, you can safely afford $160k house. There is wiggle room with this but it is a realistic price range you should aim for. In order to buy a $250k house, you would need to be earning roughly $62k a year.