Real Estate Math: How Much Do I Need To Save For A Down Payment On A House?If you've been thinking of buying a house, you probably know that you should start saving up toward a down payment.
Sep 5 2019 38376 2
Real Estate Math: How Much Do I Need To Save For A Down Payment On A House?
If you've been thinking of buying a house, you probably know that you should start saving up toward a down payment. However, if you've ever asked yourself how much you should be saving, you're not alone. I've broken down the math for you below. Use these equations - and calculators - provided to figure out your savings goal.
Find out how much you can afford to pay in housing costs each month
Conventional wisdom states that housing expenses should never exceed 38% of your total monthly income. Using that figure, if you make $5,000 per month, that would translate to a monthly housing payment - which should include additional costs like taxes, mortgage insurance, and HOA fees - of $1,900 per month.
To find your amount, the math would look like this:
Your monthly take home pay x 0.38 = Your ideal monthly housing payment
Learn how much house you can afford
Once you have your ideal monthly housing payment in hand, you can use that to find out how much house you can afford. To do this, you'll also need some additional information. You'll also need a projected annual interest rate and the number of monthly payments you'll make over the life of the loan. FHA allows up to a 42% DTI or debt to income ratio. To find out more, feel free to contact me and get Pre-Approved for a loan that suits your Income level.