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Figuring out how much you can afford to spend on a home is one of the first and most important things every potential buyer should do.
It all depends on how much you earn and how much you owe.
Stay within the bounds of these two simple rules and you should have little or no trouble making your monthly mortgage payments. Stray outside them and you'll be scrimping and scraping to write every check:
Housing costs -- including principal, interest, taxes, assessments or any other fees -- shouldn't exceed 28% of your gross or pre-tax income.
Debt payments -- including mortgage, auto loans, student loans, child support and credit card bills that will take more than six months to payoff -- shouldn't exceed 36% of your pre-tax income.
Using those rules is easy. Just enter your income and expenses into our 28/36 mortgage calculator and we'll tell you how big a loan and monthly payment you can afford.
For the majority of buyers their debt, not their income, will be the critical factor.
Let's say you and your spouse make $50,000 a year before taxes.
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