In order to afford a house you have to be able to pay the monthly payment. The monthly payment you pay to the bank is called a mortgage. Your monthly payment cannot be more than 28% of your income. The definition of income is the money you make from a job.
1. What is income?
2. What is a mortgage.
28% of your income would go to your house payment and the rest of your income would be for food, entertainment, insurance, telephone, electricity, and other necessities. Here is a chart to demonstrate.
Lets see if Sharon Brown makes enough money to afford the house she is trying to buy.
Sharon Brown's mortgage payment would be $1686.
Sharon Brown's income is $5268.
To find out 28% of Sharon's income do the math.
Change 28% to a decimal by moving the decimal point twice. .28
Multiply $5268 times .28 = 1475.04
Mortgage Payment $1686 is greater than 28% of income $1475.04
The mortgage payment is greater than 28% of income. Because the mortgage payment is more Sharon would be rejected by the bank.
