Can you afford a house?

The question is really about being able to get a mortgage. Most people can not pay cash for a home and need a mortgage and need a pre-approval stating that they are at least qualified for a mortgage.

The easy but not exact rule of thumb is that if you add up all your monthly expenses and a mortgage and divide by your gross monthly income you need to come up with a number no higher than 36%.  Lenders are looking at an income to debt ratio. Debt is car payments and student loans and credit card payments and of course a monthly mortgage payment.

There are mortgage calculators all over the internet which makes it easy to calculate how much a mortgage payment might be.

Home buyers also need a down payment and the ability to pay closing costs. Down payments start at about 3% and typical closing costs will add up to about 3% of the loan amount. There are programs for downpayment assistance and sometimes sellers can help with the closing costs.

We struggled to buy our first home but have never regretted it.

Also see Housing for minimum wage earners

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