GETTING STARTED STEP 1: Understand Your Finances & Budget One of the first steps in any homebuying search is understanding your financial situation. Identify your monthly net income — sometimes known as take-home pay after taxes and other benefits — to see what you can a ord to pay toward a mortgage each month. A good rule of thumb, according to Chase Bank: Follow the 28% rule , which says that your mortgage payment — including principal, interest, taxes, and insurance — shouldn’t exceed 28% of your monthly gross income. An easy way to calculate the max mortgage payment you can a ord is by multiplying your monthly gross income by 0.28:
Key Terms To Know When you’re buying a new home, sometimes it can feel like everyone is speaking a language you don’t understand. Use this handy list of key terms to know when you begin the homebuying process. • Closing Costs • Mortgage • Interest Rate • Earnest Money • Escrow • Good Faith Estimate • Debt to Income Ratio (DTI) • Homeowner’s Association (HOA) • Homestead Exemption • Inventory Home • Municipal Utility District Tax (MUD)
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• Monthly Gross Income = $7,500 • $7,500 x 0.28 = $2100
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