Buying a Home

An often-cited guide to home affordability is the “28/36 rule.” This guideline states that < 28% of pretax household income should be spent for mortgage payments (principal plus interest), property taxes, and home insurance. For example, if a couple grosses $100,000 a year, total annual housing costs should not be greater than $28,000 ($2,334 a month). Total household debt should not exceed 36% of pretax income.