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When you’re buying a house, you need to set a realistic budget. But it can sometimes be hard to figure out how to do that. While it may be tempting to allow the bank to just look at your finances and tell you how large your mortgage loan can be, it’s smarter to do the math yourself to make sure you’re taking all your financial goals into account.
If you aren’t sure where to start when determining how much house is within your budget, some advice from finance expert Dave Ramsey could potentially be helpful in answering this question.
Here’s what Ramsey says you can pay for a house
Dave Ramsey has a simple answer to the question of how big your housing budget should be.
“We recommend keeping your mortgage payment to 25% or less of your monthly take-home pay,” Ramsey said. He gave the example of someone who brings home $5,000 a month, who would be able to afford a monthly mortgage payment totaling $1,250 on the basis of that income.
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