How Much Can You Afford Monthly?


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Based on your personal level of existing debt, most lenders estimate your affordable monthly housing cost by putting you in one of two categories.

Are you in the 29% category or the 41% category?

 

29% Category

Use this column if you have an average amount of debt.

29% of your monthly gross income is considered to be your affordable monthly housing cost, which includes principle, interest, tax and insurance (PITI).

41% Category

Use this column only if you have very little or no debt.

41% of your monthly gross income is considered to be your affordable monthly housing cost, which includes principle, interest, tax and insurance (PITI).

 Yearly Average 
Gross
Income
 Monthly Average 
Gross
Income
Your
Affordable PITI 
Monthly Payment
at 29% of Income
Your
Affordable PITI 
Monthly Payment
at 41% of Income

$15,000

$1,250

$363

$512

$20,000

$1,667

$483

$683

$25,000

$2,083

$604

$854

$30,000

$2,500

$725

$1,025

$35,000

$2,917

$846

$1,195

$40,000

$3,333

$967

$1,366

$45,000

$3,750

$1,088

$1,537

$50,000

$4,167

$1,208

$1,708

$60,000

$5,000

$1,450

$2,050

$70,000

$5,833

$1,691

$2,391

$80,000

$6,666

$1,933

$2,733

$90,000

$7,500

$2,175

$3,075

$100,000

$8,333

$2,416

$3,416

Example:  A buyer with income of $50,000 per year, who has an average amount of debt, and is in the 29% category should have affordable monthly housing payments of principle, interest, tax and insurance (PITI) of no more than $1,208. If the same buyer has little or no other debt and is within the 41% category, lenders consider a monthly PITI of $1,708 to be affordable.

Remember:  These numbers have NOTHING to do with current mortgage interest rates! They show a buyer's ability to repay on a monthly basis. When interest rates are lower, a monthly payment of $1,208 allows borrowing a higher mortgage amount. When interest rates are higher, the same $1,208 payment allows for a lower mortgage amount. Likewise, as tax and insurance rates increase, the affordable mortgage amount decreases.


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