{"id":53246,"date":"2024-04-23T03:07:39","date_gmt":"2024-04-23T07:07:39","guid":{"rendered":"https:\/\/www.iwillteachyoutoberich.com\/?p=26644"},"modified":"2025-04-21T11:38:37","modified_gmt":"2025-04-21T15:38:37","slug":"how-much-house-can-i-afford","status":"publish","type":"post","link":"https:\/\/www.iwillteachyoutoberich.com\/how-much-house-can-i-afford\/","title":{"rendered":"How Much House Can I Afford Using The 28\/36 Rule?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"53246\" class=\"elementor elementor-53246\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-14295533 elementor-section-boxed elementor-section-height-default elementor-section-height-default qodef-elementor-content-no\" data-id=\"14295533\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5e6853cb\" data-id=\"5e6853cb\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-d4e2c1a elementor-widget elementor-widget-text-editor\" data-id=\"d4e2c1a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>There\u2019s no secret to buying a house\u00a0\u2014 but it does involve thinking differently than <em>most<\/em> people. &#8220;How much house can I afford?&#8221; is a question not nearly enough people ask themselves when considering this major purchase.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>There are too many people who make the biggest purchases of their lives without fully understanding the <u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/surprising-real-estate-investing-myths\/\" target=\"_blank\" rel=\"noopener noreferrer\">true costs<\/a><\/u>. If you make the wrong move, you\u2019ll undo years of hard work in other areas of your financial life.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Luckily, there\u2019s a good rule of thumb to help you find out exactly how much you can afford: It&#8217;s called the 28\/36 rule.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0675a4b elementor-widget elementor-widget-text-editor\" data-id=\"0675a4b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2 id=\"h-what-is-the-28-36-rule\">What is the 28\/36 Rule?<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>The 28\/36 rule is used by lenders to determine how much house you can afford \u2014 and it\u2019s pretty straightforward:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:list {\"ordered\":true} --><\/p>\n<ol>\n<li><strong>Maximum household expenses<\/strong><strong>\u00a0shouldn\u2019t exceed 28% of your gross monthly income. <\/strong>This includes everything within your home mortgage.<\/li>\n<li><strong>Total household debt shouldn\u2019t exceed more than 36% of your gross monthly income. <\/strong>This is also known as your <u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/debt-to-asset-ratio\/\" target=\"_blank\" rel=\"noopener noreferrer\">debt-to-income ratio<\/a><\/u>.<\/li>\n<\/ol>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Let\u2019s break down each of those areas now a little bit more. That way, you\u2019ll have a better idea of what lenders are looking for.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:heading {\"level\":3} --><\/p>\n<h3 id=\"h-maximum-household-expenses\">Maximum Household Expenses<\/h3>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>All of the expenses that make up your monthly mortgage payment are also known as the PITI:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:list --><\/p>\n<ul>\n<li><strong>Principal. <\/strong>This is the part of the payment that goes towards paying down the amount you borrowed to purchase the house.<\/li>\n<li><strong>Interest. <\/strong>This is the rate creditors charge for lending you the principal.<\/li>\n<li><strong>Taxes. <\/strong>This is your property tax.<\/li>\n<li><strong>Insurance. <\/strong>This is your\u00a0homeowner\u2019s insurance.<\/li>\n<\/ul>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>When you take the amount you owe towards your PITI and compare it to your income, you have your \u201cfront-end ratio.\u201d This number is what most lenders look at when determining how much they\u2019ll lend to you.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><strong>Dollar amount of your PITI <\/strong><strong>\u00f7 Dollar amount of your gross monthly income = Front-end ratio<\/strong><\/center>\n<p><!-- \/wp:html --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>And then:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><strong>Front-end ratio x 100 = Front-end ratio percentage<\/strong><\/center>\n<p><!-- \/wp:html --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>With the 28\/36 rule, you\u2019ll want your PITI number to be less than 28% of your gross monthly income. Use this formula to find out exactly how much house you can afford.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>For example, if your gross monthly income amounts to $4,000 a month, the best mortgage you\u2019re likely to attain would amount to no more than $1,120 a month since that\u2019s 28% of your income.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:heading {\"level\":3} --><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ffe41fc elementor-widget elementor-widget-text-editor\" data-id=\"ffe41fc\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3 id=\"h-total-debt\">Total debt<\/h3>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Like your front-end ratio, your debt-to-income ratio is also worth calculating\u00a0if you plan on <a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/refinance-home-mortgage\/\" target=\"_blank\" rel=\"noopener\"><u>getting a home mortgage<\/u>.<\/a><\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Unlike your front-end ratio\u00a0(which compares the amount you owe on your house to your income), this number compares your income to your debt. Creditors look at this number to determine how risky it is to lend to you.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>The riskier it is to lend to you, the smaller chance you have of attaining a home loan \u2014 or at least a home loan with a good interest rate.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Much like your debt-to-asset ratio, calculating it is simple:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><strong>Dollar amount of monthly debt you owe <\/strong><strong>\u00f7<\/strong><strong>\u00a0Dollar amount of your gross monthly income = Debt-to-income ratio<\/strong><\/center>\n<p><!-- \/wp:html --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>And then:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><strong>Debt-to-income ratio x 100 = Debt-to-income ratio percentage<\/strong><\/center>\n<p><!-- \/wp:html --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Say you owe about $1,000 in debt month-to-month and make $75,000 a year ($6,250\/month). We\u2019d then take 1,000 divided by 6,250 in order to get our debt-to-income ratio, like so:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><strong>1,000 <\/strong><strong>\u00f7 6,250 = .16<\/strong><\/center>\n<p><!-- \/wp:html --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Multiply .16 by 100 and you have 16% for your debt to income ratio \u2026 but what does that number mean?<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>The lower the number is, the better. While the 28\/36 rule-of-thumb says that you should ideally have no more than 36% for your debt-to-income ratio, <u><a href=\"https:\/\/www.wellsfargo.com\/goals-credit\/smarter-credit\/credit-101\/debt-to-income-ratio\/understanding-dti\/\" target=\"_blank\" rel=\"noopener noreferrer\">most lenders will provide a mortgage up to 49%<\/a><\/u>.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>So if your debt-to-income ratio amounted to 16% like in the example above, you\u2019d be in good shape for a loan.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:heading --><\/p>\n<h2 id=\"h-iwt-s-suggestion-be-as-conservative-as-possible\">IWT\u2019s suggestion: Be as conservative as possible<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>When it comes to personal finance, I like to be aggressive in certain areas, like investing.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>However, when it comes to real estate, I\u2019m typically as conservative as possible. That\u2019s why I urge you to stick to tried-and-true rules like 20% down, a 30-year fixed-rate mortgage, and a total monthly payment that represents no more than 30% of your gross pay. That is a good rule of thumb to answer the question of &#8220;How much house can I afford?&#8221;.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>If you can\u2019t do that, wait until you\u2019ve saved more.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>It\u2019s okay to stretch a little, but don\u2019t stretch beyond what you can actually pay. If you make a poor financial decision upfront, you\u2019ll end up struggling \u2014 and it can compound and become a bigger problem throughout the life of your loan.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Don\u2019t let this happen, because it will undo all the hard work you put into the other areas of your <a href=\"https:\/\/www.iwillteachyoutoberich.com\/financial-literacy\/\" target=\"_blank\" rel=\"noopener\">financial life<\/a>.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>If you make a good financial decision when buying a house, you\u2019ll be in an excellent position.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fca11ad elementor-widget elementor-widget-heading\" data-id=\"fca11ad\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-heading-title elementor-size-xl\">The world wants you to be vanilla...<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9fc986d elementor-widget elementor-widget-text-editor\" data-id=\"9fc986d\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>\u2026but you don\u2019t have to take the same path as everyone else. How would it look if you designed a Rich Life on your own terms? Take our quiz and find out: <!-- notionvc: f32dfe01-c35a-4588-bccb-234410c91756 --><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f5de498 elementor-widget elementor-widget-button\" data-id=\"f5de498\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"https:\/\/www.iwillteachyoutoberich.com\/rich-life-quiz\/\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">Take the Quiz<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5368ee5e elementor-widget elementor-widget-text-editor\" data-id=\"5368ee5e\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:heading --><\/p>\n<h2 id=\"h-how-to-save-thousands-toward-a-house\">How to Save Thousands Toward a House<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Saving up a big down payment can dramatically improve how much house you can afford. Have you ever gone to buy a car or cell phone, only to learn that it\u2019s way more expensive than advertised? I know I have, and most of the time I just bought it anyway because I was already psychologically set on it.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>But because the numbers are so big when purchasing a house, even small surprises will end up costing you a ton of money.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>For example, if you stumble across an unexpected cost of $100 per month, would you really cancel the paperwork for a new home? Of course not. But that minor charge would add up to $36,000 over the lifetime of a 30-year loan \u2014 plus the opportunity cost of investing it.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Remember that the closing costs \u2014 including all administrative fees and expenses \u2014 are usually between 2% and 5% of the house price. So on a $200,000 house, that\u00a0can be\u00a0$10,000.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Keep in mind that ideally the total price shouldn\u2019t be much more than three times your gross annual income. (It\u2019s okay to stretch here a little if you don\u2019t have any debt.) And don\u2019t forget to factor in insurance, taxes, maintenance, and renovations.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>If all this sounds a little overwhelming, then good. It should be. This is likely the biggest purchasing decision of your life. That\u2019s why you need to research as much as you can before you dive in.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>To help you with that, be sure to check out my very best resources below on the topic:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:list --><\/p>\n<ul>\n<li><strong><u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/buying-a-house\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to buy a house<\/a><\/u><\/strong><strong>. I<\/strong>\u00a0break down the five exact steps you should take in order to buy a house.<\/li>\n<li><strong><u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/surprising-real-estate-investing-myths\/\" target=\"_blank\" rel=\"noopener noreferrer\">Intro to real estate investing<\/a><\/u><\/strong><strong>. <\/strong>I give you the myths surrounding real estate and also the systems to get started with investing.<\/li>\n<li><strong><u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/the-real-scoop-on-real-estate\/\" target=\"_blank\" rel=\"noopener noreferrer\">7-part real estate primer<\/a><\/u><\/strong><strong>.<\/strong>\u00a0My friend Owen Johnson breaks down the intricacies of real estate in seven awesome articles.<\/li>\n<\/ul>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>For now, though, I want to show you a system to help you save money painlessly\u00a0for a house.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:heading --><\/p>\n<h2 id=\"h-how-to-save-for-a-down-payment\">How to Save For a Down Payment<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Instead of skipping lunches, cutting out lattes, or canceling your Netflix membership, I suggest you leverage the power of a <a href=\"https:\/\/www.iwillteachyoutoberich.com\/tip-using-sub-savings-accounts-for-unexpected-expenses\/\" target=\"_blank\" rel=\"noopener\"><em>sub-savings account<\/em><\/a>.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>These are accounts that you can create within your normal savings account for specific purchases.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>And when you couple it with an <a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/the-psychology-of-automation-building-a-bulletproof-personal-finance-system\/\" target=\"_blank\" rel=\"noopener\"><u>automated personal finance system<\/u><\/a>, you\u2019ll be able to save even faster.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>This is how you can accomplish savings goals passively because you don\u2019t see the money when it transfers. It\u2019s <em>automatically<\/em>\u00a0withdrawn from your checking account and put towards your specific savings goals. You\u2019ll never miss it!<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>To set one up, you need to have a savings account that lets you set up sub-savings accounts with it.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Check out my article on the <u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/best-savings-account\/\" target=\"_blank\" rel=\"noopener noreferrer\">best savings accounts<\/a><\/u>\u00a0for a good list to choose from.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>I use Capital One 360 (formerly ING Direct). I talked about this bank account in my <em>New York Times <\/em>best-selling book <a href=\"https:\/\/www.iwillteachyoutoberich.com\/books\/\" target=\"_blank\" rel=\"noopener\"><em>I Will Teach You To Be Rich <\/em><\/a>over 10 years ago, and I STILL use the same account now.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>But it doesn\u2019t really matter which savings account you choose as much as just getting started. So don\u2019t spend too much time deciding which one to go with.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Once you set one up, you can even name these accounts to reflect your goals.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>When I first discovered sub-savings accounts, I created one and named it \u201cDown Payment\u201d for a down payment on a house. I was regularly transferring money into it based on my savings goals using my automated finances.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>As the months passed, the amount in that account grew, and I felt really proud of my accomplishment.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>During this time, one of my friends was just blindly putting away money in an account he had mentally earmarked for vague goals.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Though we might have had the same amount saved away, the difference between us <em>psychologically<\/em>\u00a0was staggering. Where he felt despair about trying to save money, I was motivated.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>For me, I wasn\u2019t working towards $20,000 for a down payment. I was working on saving $333 a month over five years \u2014 a perfectly achievable goal, especially after I tracked my progress.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Eventually, my friend did open up his own sub-savings account. He told me that doing so changed his entire perspective on saving money for the better.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Check out all the different sub-savings accounts I had in my old savings account.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><img decoding=\"async\" class=\"wp-image-26642\" style=\"border: solid 4px #ffffff; box-shadow: 0px 0px 3px 0px rgba(0,0,0,.15);\" src=\"https:\/\/www.iwillteachyoutoberich.com\/wp-content\/uploads\/pasted-image-0-554.png\" alt=\"pasted image 0 554\" \/><br \/><em>ING Direct is now Capital One 360. BTW that wedding one is going to be <u><a href=\"https:\/\/www.iwillteachyoutoberich.com\/blog\/the-28000-question-why-are-we-all-hypocrites-about-weddings\/\" target=\"_blank\" rel=\"noopener noreferrer\">put to good use<\/a><\/u>.<\/em><\/center><!-- \/wp:html -->\n<p><!-- wp:paragraph --><\/p>\n<p>Here\u2019s a look at a few sub-savings accounts I have now:<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:html --><\/p>\n<center><img decoding=\"async\" class=\"wp-image-26643\" style=\"border: solid 4px #ffffff; box-shadow: 0px 0px 3px 0px rgba(0,0,0,.15);\" src=\"https:\/\/www.iwillteachyoutoberich.com\/wp-content\/uploads\/Screen-Shot-2018-01-25-at-1.51.06-PM-4.png\" alt=\"Screen Shot 2018 01 25 at 1.51.06 PM 4\" \/><br \/><em>ING switched to Capital One 360, and I used the money I saved to buy an engagement ring.<\/em><\/center><!-- \/wp:html -->\n<p><!-- wp:paragraph --><\/p>\n<p>Once you have your sub-savings accounts open, it\u2019s time to automate the entire system.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Automated finances are the ultimate cure to never knowing how much you have in your checking account and how much you can spend.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>When you receive your paycheck, your money is funneled to exactly where it needs to go \u2014 whether that be your utilities, rent, Roth IRA, <a href=\"https:\/\/www.iwillteachyoutoberich.com\/401k-the-single-best-way-to-grow-your-money\/\" target=\"_blank\" rel=\"noopener\">401(k)<\/a>, or your savings account.<\/p>\n<p><!-- wp:heading --><\/p>\n<h2 id=\"h-earn-money-for-your-future-home\">Earn Money for Your Future Home<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>I suggest putting around 5% of your income into your sub-savings account each month for your house. Though this amount <em>seems <\/em>small, you\u2019re going to be surprised at how easy it will add up over time.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>Luckily, you can make that 5% even bigger. How? Simple: Earning more money.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>I\u2019ve said it once and I\u2019ll say it a thousand more times: <strong>There\u2019s a limit to how much you can save but no limit to how much you can earn. <\/strong>\u00a0<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:heading --><\/p>\n<h2>FAQs About How Much House Can I Afford<\/h2>\n<p><!-- \/wp:heading --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<h4><strong>How does where I live impact how much house I can afford?<\/strong><\/h4>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>The <a href=\"https:\/\/www.iwillteachyoutoberich.com\/should-i-buy-a-house-now\/\" target=\"_blank\" rel=\"noopener\">cost of housing<\/a> is a major factor in deciding where you want to live. You can spend more or less on your monthly mortgage payment, depending on what part of the country you choose. In some areas, you can even find relatively affordable homes. You might be able to buy a much bigger piece of property for the same price in St. Louis than you could for the same price in San Francisco. It\u2019s also important to think about the area\u2019s overall cost of living: If transportation and utility costs are low, for example, then you may have some extra cash left over at the end of each month that can be used toward housing costs.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<h4><strong>What are the most important factors that help determine how much house I can afford?<\/strong><\/h4>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>If you&#8217;re thinking about buying a home, there are a few key factors to consider. You need to figure out how much money you earn, how much money you can contribute to a down payment, and how much money you&#8217;re spending each month on <a href=\"https:\/\/www.iwillteachyoutoberich.com\/how-to-find-out-all-my-debt\/\" target=\"_blank\" rel=\"noopener\">other debts<\/a>. When you apply for a mortgage, a lender will scrutinize every aspect of your personal finances to assign a level of risk on whether or not you&#8217;ll be able to pay the loan back. The lower your debt-to-income ratio and the larger your down payment, the better.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<h4><strong>How much debt can I already have and still get a mortgage?<\/strong><\/h4>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>If you&#8217;re applying for a mortgage, one of the first things that will get looked at is your debt-to-income ratio (DTI). The DTI is a measurement of how much money you make versus how much debt you have\u2014and it&#8217;s important to have this number in mind before you start shopping for a house.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p>The amount of debt you can have will depend on your income, and in particular your DTI ratio. Generally having a DTI of 30% or less is a rule of thumb going into the mortgage application process, and with the mortgage it shouldn&#8217;t then exceed 43% on the back end.<\/p>\n<p>Owning a house should add to your life, not cause stress and anxiety. In <a href=\"https:\/\/www.iwillteachyoutoberich.com\/069-chris-camilla\/\" target=\"_blank\" rel=\"noopener\">episode 69 of my podcast<\/a>, you&#8217;ll meet a couple that thought a vacation home would be a dream- until it turned into a nightmare.<\/p>\n<p><!-- \/wp:cover --><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d7e34aa elementor-widget elementor-widget-qi_addons_for_elementor_blockquote\" data-id=\"d7e34aa\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"qi_addons_for_elementor_blockquote.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"qodef-shortcode qodef-m qodef-qi-blockquote qodef-layout--top qodef--\">\n\t\t\t\t<h4 class=\"qodef-m-text\">\n\t\t\tIf you liked this post, you\u2019d LOVE my Ultimate Guide to Personal Finance\n\t\t<\/h4>\n\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ab72c92 elementor-widget elementor-widget-text-editor\" data-id=\"ab72c92\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>It\u2019s one of the best things I&#8217;ve published, and totally free \u2013 just tell me where to send it:<!-- notionvc: d41f814a-86e4-40d5-9bf3-f5d4c5d30f07 --><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4ea69c3 elementor-widget elementor-widget-qi_addons_for_elementor_wp_forms\" data-id=\"4ea69c3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"qi_addons_for_elementor_wp_forms.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"qodef-shortcode qodef-m qodef-qi-wp-forms\">\n\t<div class=\"wpforms-container wpforms-container-full\" id=\"wpforms-53563\"><form id=\"wpforms-form-53563\" class=\"wpforms-validate wpforms-form\" 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id=\"wpforms-53563-field_15\" name=\"wpforms[fields][15]\" value=\" \/ UG to Personal Finance\"><\/div><div id=\"wpforms-53563-field_14-container\" class=\"wpforms-field wpforms-field-hidden\" data-field-type=\"hidden\" data-field-id=\"14\"><input type=\"hidden\" id=\"wpforms-53563-field_14\" name=\"wpforms[fields][14]\" value=\"{entry_page}\"><\/div><div id=\"wpforms-53563-field_20-container\" class=\"wpforms-field wpforms-field-html\" data-field-type=\"html\" data-field-id=\"20\"><div id=\"wpforms-53563-field_20\"><strong>If you like this post, you'd love my Ultimate Guide to Personal Finance<\/strong><\/div><\/div><div id=\"wpforms-53563-field_21-container\" class=\"wpforms-field wpforms-field-html\" data-field-type=\"html\" data-field-id=\"21\"><div id=\"wpforms-53563-field_21\">It\u2019s one of the best things I\u2019ve published (and 100% free), just tell me where to send it:<\/div><\/div><div id=\"wpforms-53563-field_10-container\" class=\"wpforms-field wpforms-field-name\" data-field-type=\"name\" data-field-id=\"10\"><label class=\"wpforms-field-label wpforms-label-hide\" for=\"wpforms-53563-field_10\">First Name <span class=\"wpforms-required-label\">*<\/span><\/label><input type=\"text\" id=\"wpforms-53563-field_10\" class=\"wpforms-field-medium wpforms-field-required\" name=\"wpforms[fields][10]\" placeholder=\"First Name\" required><\/div><div id=\"wpforms-53563-field_11-container\" class=\"wpforms-field wpforms-field-email\" data-field-type=\"email\" data-field-id=\"11\"><label class=\"wpforms-field-label wpforms-label-hide\" for=\"wpforms-53563-field_11\">Email <span class=\"wpforms-required-label\">*<\/span><\/label><input type=\"email\" id=\"wpforms-53563-field_11\" class=\"wpforms-field-medium wpforms-field-required\" data-rule-restricted-email=\"1\" name=\"wpforms[fields][11]\" placeholder=\"Email Address\" spellcheck=\"false\" required><\/div><div id=\"wpforms-53563-field_19-container\" class=\"wpforms-field wpforms-field-html\" data-field-type=\"html\" data-field-id=\"19\"><div id=\"wpforms-53563-field_19\">Along with the guide, I'll also send you my Insiders newsletter where I share other exclusive content that's not on the blog.<\/div><\/div><\/div><!-- .wpforms-field-container --><div class=\"wpforms-submit-container\" ><input type=\"hidden\" name=\"wpforms[id]\" value=\"53563\"><input type=\"hidden\" name=\"page_title\" value=\"\"><input type=\"hidden\" name=\"page_url\" value=\"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts\/53246\"><input type=\"hidden\" name=\"url_referer\" value=\"http:\/\/www.iwillteachyoutoberich.com\/how-much-house-can-i-afford\/\"><button type=\"submit\" name=\"wpforms[submit]\" id=\"wpforms-submit-53563\" class=\"wpforms-submit\" data-alt-text=\"Sending...\" data-submit-text=\"Send me the guide!\" aria-live=\"assertive\" value=\"wpforms-submit\">Send me the guide!<\/button><\/div><\/form><\/div>  <!-- .wpforms-container --><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Knowing how much house you can afford is your first step to making the biggest purchase of your life. Using the 28\/36 rule, you\u2019ll be able to figure out exactly how much you can spend on a mortgage each month. <\/p>\n","protected":false},"author":8,"featured_media":88865,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"_lmt_disableupdate":"no","_lmt_disable":"","_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[160],"class_list":["post-53246","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"acf":[],"aioseo_notices":[],"modified_by":"ljknoll95@gmail.com","_links":{"self":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts\/53246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/comments?post=53246"}],"version-history":[{"count":0,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts\/53246\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/media\/88865"}],"wp:attachment":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/media?parent=53246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/categories?post=53246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}