Ready to buy a house but not sure how much you can afford in today's high-interest rate environment?

Don't let the banks dictate your budget!

Here's a simple formula to help you determine a realistic spending range:

Take your Gross Household Income (pre-tax) X 28%.

That's your maximum Principal-Interest-Taxes-Insurance (PITI) annual payment. Divide by 12 to get your monthly amount.

But don't forget to also factor in OTHER debt payments - like cars, student loans, and credit cards.

Take your Gross Household Income (pre-tax) X 36%.

That's your maximum total for ALL debt payments. Divide by 12 to get your monthly amount.

If your total debt payments exceed 36%, you need to spend less than 28% on your house. And even if you're under 36%, it's still wise NOT to go over 28% on your house.

Ex. Household Income = 275K

28% = $77,000 / 12 = $6,416. This includes principal, interest, taxes, and insurance. REMEMBER, when buying a house your taxes will always increase so go lower than you can afford.
36% = $99,000 / 12 = $8,250. This includes your house, student loans, cars, childcare, educational funding, life insurance, etc. Any reoccurring monthly debt (or commitments) that cannot be canceled. You can cancel Netflix but not your cell phone.

Recent posts

2024 Q4 Quarterly Newletter

Todd J. Gourno, CFP®

Ohio Deferred Comp vs Mission Square

Ryan A. Mink, ChFC®, CRPS®

STRS Ohio: Should YOU be Concerned about YOUR Pension

Todd J. Gourno, CFP®

2024 Q3 Quarterly Newsletter

Todd J. Gourno, CFP®

How Can Ohio Police and Fire Members can take advantage of their Re-Employment Contributions?

Ryan A. Mink, ChFC®, CRPS®

View the OPERS Video Library

View the STRS Video Library

View the OP&F Video Library

Financial advice from REAL people who know the system from the inside - a former Ohio STRS Ohio employee and OPERS member, and a former Ohio police officer and OP&F member.

Click to Talk with an Advisor

Check the background of your financial professional on FINRA's BrokerCheck. Securities and advisory services offered through Registered Representatives of Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA, SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.

This site is published for residents of the United States only. Registered Representatives of Cetera Advisors LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every representative listed. For additional information please contact the representative(s) listed on the site, visit the Cetera Advisors LLC site at ceteraadvisors.com

Individuals affiliated with this broker/dealer firm are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.