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Education for Buyers

How Much Can I Comfortably Afford?

For starters, you can put the most frequently-used lenders' rule-of-thumb to work: the 28% and 36% formulas.

The 28% test permits you to spend no more than 28% of your gross monthly income on your total monthly housing costs, including principal, interest, taxes, and insurance.

The 36% limit covers both your P.I.T.I. and long-term debts such as alimony, regular household expenses, outstanding loans, and support for children.

(For Example) Do your calculations for the following:

1.	Your gross monthly income:(Gross is before deductions for taxes and Social Security)	$____________________
		X 28%
	Maximum House Payment	$____________________

2.	Your gross monthly income	$____________________
		X 36%
		$____________________
	Subtract your existing monthly debt (Debts should include current monthly obligations, such as loan payments, credit card payments, child support, etc.)	-____________________

	Maximum House Payment	$____________________

Next: Your Household Budget

	3212 Skipwith Road Suite 110 Richmond, VA 23294 Office: 804-346-1000 Fax : 804-346-5525
	5370 S Laburnum Avenue Richmond, VA 23231 Office: 804-236-1997 Fax : 804-236-1976
	6301 Harbourside Drive Suite 200 Midlothian, VA 23112 Office: 804-739-9370 Fax: 804-739-2790

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