![]() ![]() “You may work very hard to find the perfect home in the perfect neighborhood just to find out the property taxes will cost you another $1,000 per month.”īefore you set a budget for your purchase, take stock of your monthly budget and financial obligations to determine whether your estimated mortgage payment could fit into that budget. "The costs do not just include things within the home property taxes and homeowners’ insurance are a huge component as well,” says Braun. Other costs such as immediate home improvements, insurance, property taxes, and maintenance can all hike up the annual costs of owning your home. Don’t be fooled by the purchase price when shopping for a new home. “However, it fails to consider other important factors such as future income increases and temporary spending needs-think daycare, college savings, or even taking care of a loved one.” Your best bet is to budget for a home well below the 28% threshold to give yourself extra breathing room if your income changes or unexpected expenses crop up. “Like any good guideline, the 28% rule works well in a vacuum,” says Ted Braun, a certified financial planner, senior vice president, and financial advisor at Wealth Enhancement Group. It’s impossible to predict how your income will change over time, so it’s important to take the 28% rule with a grain of salt. How your income will change over time.What does your repayment timeline look like for those debt payments? Will those payments increase over time? These are all questions you’ll want to ask yourself before deciding that you can afford a specific monthly payment. The other half of the 28/36 rule requires you to consider your other debt obligations, like your credit card bill, student loan, car payment, etc. But knowing how much realistically fits into your budget will require further considerations, including: You can use the 28/36 rule to give you a general idea of how much you could expect to pay for a home within a specific price range. Before buying a home, consider the following ![]()
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