So, you’re itching to buy a home. Staying put, decorating and planting a garden don’t seem so bad anymore – you’re ready for the challenge! The question is, can you afford to buy? Crunch some numbers to see if you can afford a home!

There’s a classic guideline called the 28/36 rule. The first part of this says that your monthly house payment (including mortgage principal and interest, property taxes, and home insurance) should amount to no more than 28% of your monthly gross income (what you earn before income taxes, Social Security, and other deductions come out of your check).

Let’s say you gross $4,000 a month. By the rule, you should spend no more than $1,120 ($4,000 x 0.28) per month for your house payments.

The rest of the rule advises that your total monthly debt obligations should add up to no more than 36% of your gross income. For someone grossing $4,000 a month, that would be $1,440 ($4,000 x 0.36). This amount should cover all debt payments each month: mortgage, credit card(s), student loans, car payments, utilities, cable, child support, etc.

Remember, these are just guidelines. In the end, you decide how large a house payment you can manage based on your financial situation (Key Word: manage). Maybe you want smaller house payments so you can have some wiggle room in your budget for things like unexpected expenses or monthly deposits into your savings. Either way, run the numbers and see what’s possible.

Still want advice? Talk to someone at Orion. They could even tell you how much you would be pre-approved for – another smart step towards buying a home.