Understanding Home Buying Rules

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What is a down payment when purchasing a home?

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A down payment is the initial amount of money that a buyer pays upfront when purchasing a home, typically expressed as a percentage of the home's purchase price.

Tags

CCSS.RI.7.5

CCSS.RI.8.3

CCSS.RI.8.5

CCSS.RI.9-10.3

CCSS.RI.9-10.5

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What is the recommended minimum down payment percentage for home buying?

Back

20% is the recommended minimum down payment percentage for home buying.

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CCSS.6.RP.A.3C

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What does the Rule of 28/36 refer to in home buying?

Back

The Rule of 28/36 is a guideline that suggests that no more than 28% of a person's gross monthly income should go towards housing expenses, and no more than 36% should go towards all debts.

Front

What does the number 36 represent in the Rule of 28/36?

Back

The number 36 represents the maximum percentage of a person's income that should go towards all debts, including housing.

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CCSS.7.RP.A.3

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What does the number 28 represent in the Rule of 28/36?

Back

The number 28 represents the maximum percentage of a person's income that should go towards housing expenses.

Tags

CCSS.7.RP.A.3

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How do you calculate the maximum affordable housing expense using the Rule of 28?

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To calculate the maximum affordable housing expense, multiply your gross monthly income by 0.28.

Tags

CCSS.7.RP.A.3

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If Olivia and Ethan earn a combined monthly income of $26,800, what is their maximum affordable housing expense according to the Rule of 28?

Back

Their maximum affordable housing expense would be $7,504 (26,800 x 0.28).

Tags

CCSS.7.RP.A.3

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What is the formula to determine if a couple can afford a specific house payment using the Rule of 36?

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Calculate 36% of their combined gross monthly income and subtract their total monthly debts to see if the remaining amount covers the house payment.

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CCSS.6.RP.A.3C

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If Maria and John earn a combined monthly income of $16,000, what is the maximum they should spend on housing expenses according to the Rule of 28?

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They should spend a maximum of $4,480 on housing expenses (16,000 x 0.28).

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CCSS.6.RP.A.3B

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What are some common types of debts considered in the Rule of 36?

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Common types of debts include mortgage payments, car loans, student loans, and credit card payments.

Tags

CCSS.7.RP.A.3