Do not, repeat Do NOT believe what any bank tells you about "how much house you can afford."
I don't know where you got your figure, but the old rule of thumb is "Housing should be no more than 25% of your monthly take-home income," whether that's rent or a house payment. Many folks stretch it to 30 or 35% these days, but that *is* stretching it.
Meanwhile, many banks will be happy to tell you that 50% is fine. They do not care if you are eating ramen, sitting on the floor, and staring at each other all evening 'cause you can't afford to go to a movie. You may be much happier living in a smaller house that's cheaper to heat, while otherwise living well and still being able to save for your mid-term and long-term goals.
That said, if you can find something in your area that meets your needs and has payments less than a third of your income (and you do know that interest-only loans are Bad Things, right?), buying is ultimately a much better deal than renting. |
