When you’re trying to figure out how much home you can afford, it’s important to take a look at your monthly budget. What are your priorities? Are you spending most of your income on rent, and want to change that? Are you living within your means, and looking for ways to save money?
When thinking about how much house you can afford, it’s good to think big picture. There are all kinds of ways to go about this, but here’s one method: According to the 28 percent rule, a household should spend no more than 28% of its gross monthly income on total housing expenses. This is a common standard used to determine housing affordability. If a house requires more than 28% of your income, it might be a struggle for you to afford it. For example, while 28 percent of your gross monthly income is often cited as an appropriate amount to spend on housing expenses, that doesn’t mean that’s right for everyone. However, according to ATTOM Data Solutions, homeownership remains within the average workers’ financial means.
The good news? Homeownership remains within reach for most Americans in spite of increasing prices and mortgage rates. In fact, a median-priced home required only 26.3 percent of the average national wage in the first quarter of 2022. That’s higher than previous quarters but still less than 28 percent, which means homeownership remains within reach despite increasing prices and mortgage rates.
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