First time home buyer and I have no idea what I can afford. Excellent credit. I know to get a preauthorization before looking but want to skim homes the meantime. Any good rule of thumb when searching?

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Look at it from a few different angles ...

- Purchase price to not exceed 2.5x annual HHI. Maybe stretch to 3x in a hot hcol market
- Monthly payment PITI to not exceed 35% of total take home pay for a month
- Down payment of 20% to avoid PMI

All of these are rules of thumb. You might not conform to all. Just stay in the general vicinity. Only you, or you and spouse, will know. Don't be swayed by realtors and mortgage brokers who will push you to more expensive options.

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2-2.5x your HHI

likesmart

Two times of yearly salary gross, or take home after taxes?

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Gross

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Do the monthly calculations on a bunch of different priced homes you like. Pay more attention to your take home pay and be realistic. Try to keep the monthly mortgage payment at 1/3 of your take home pay. Just did this whole process a few months ago.

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What’s your market? Typical heuristic would be mortgage is no more than 2x your currently salary.

Ohio. One of the cheapest markets in the US. You’ll be fine. Buy this fall/winter. The cost of a house for you is less than my down payment in my VHCOL area. If it’s your first purchase, you’ll be nervous, but you’ll be fine.

Everything everyone is saying about using your income is correct. However, if you have any large liabilities/expenses (e.g. student loans, child care, etc.) it’s a whole different ball game. You will be able to afford a lot less than if you were just looking at your income.

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