Ryan asks Dave how to determine how much house you can afford based on your yearly income. Dave gives the answer and an explanation here.Read Transcript
The Home Buying Process Made Easy
Each month, thousands of people spend too much on their home purchase. We’ll show you how to find a house you love that you can also afford.
1) Make sure your finances are in order before buying a home.
Before buying a home, you should pay off all of your debt, such as car payments, credit cards and student loans. You should also have 3–6 months of expenses in an emergency fund and save up at least 10–20% of the home price for a down payment.
2) Figure out how much your monthly payment will be.
Your monthly mortgage payment should be less than 25% of your total take-home pay. It’s important to know how much home you can afford so you don’t wind up in financial trouble.
3) Get a 15-year, fixed-rate mortgage.
A 15-year, fixed-rate mortgage will save you big money in interest in the long run, versus a 30-year or variable rate mortgage.
4) Find a good real estate agent.
A real estate agent will help make sure you don’t pay too much for your new home. They can also deal with unexpected home-buying hurdles and answer your questions before you take ownership.
Need help navigating the home buying process? A good real estate agent can make all the difference.
The Basics of Buying a Home
Hear From the Experts
Kayla asks if taxes and insurance should be factored into the 25% of income used to pay for housing.Read Transcript
Hannah asks when it's okay to purchase a house without 20% down. Dave says when you're willing to pay PMI.Read Transcript
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