Buying your first home? Start with these three numbers
These are the three numbers from my First-Time Homebuyer Handbook that I walk every new buyer through, and none of them requires a finance degree.
28 percent
A useful ceiling for your whole monthly home payment, mortgage, taxes, and insurance together, as a share of your gross monthly income. Earn $60,000 a year and that is about $1,400 a month. It is a rule of thumb, not a law, but it keeps a dream house from quietly becoming a stressful one.
36 percent
Lenders also look at all your debts together, the future mortgage included. Keeping that total near 36 percent of income or less makes approvals smoother and rates better. Car payments and student loans count, so we look at the whole picture before touring anything.
3 to 5 percent, not 20
The famous 20 percent down payment is the biggest myth in this business. Conventional loans start around 3 percent down, FHA at 3.5, and qualifying veterans can buy with zero down. Twenty percent only marks where private mortgage insurance drops off. Plenty of my buyers got their keys with a fraction of what they thought they needed.
Want the whole handbook? It is free, and it covers offers, inspections, and closing day too. Send me a note and I will get it to you the same day.
