To calculate your general affordability range, we take into account a few primary items, such as your household income, monthly debts (for example, car loan and student loan payments) and the amount of available savings for a down payment. That said, as a home buyer, it’s important to have a certain level of comfort in understanding your monthly mortgage payments. While your household income and monthly debts may be relatively stable, your overall savings and how much you wish to allocate toward your home can vary depending on how much you want to set aside for a rainy day or how much you want to set aside for a future expenditure.
A good rule of thumb is to have three months of your housing payments, including your monthly expenses, in reserve. This will give you an additional buffer in case there is some unexpected event.