Part of the preparation involved in buying a home is figuring out where you stand financially. There are many costs associated with home ownership, so knowing how much home you can afford is vital.
Watch the video to learn about Getting Ready To Buy a Home, then test your knowledge at the end of the lesson.
What are ongoing costs associated with being a homeowner?
A. Repairs
B. Taxes
C. Insurance
D. All of the above
How can you calculate the maximum amount you should spend on housing payments?
A. Divide gross household income by 12, then multiply that amount by 0.36
B. Divide gross household income by 12, then multiply that amount by 0.28
C. Multiply gross household income by 0.28, then divide that amount by 6
D. Multiply gross household income by 0.36, then divide that amount by 12
You’ll typically need to purchase private mortgage insurance (PMI) if you put less than 20% down on a home.
A. True
B. False
You can find a local housing counselor using a free tool provided by the Consumer Financial Protection Bureau:
Find a housing counselor now »
Now that you know how the math works and how much down payment you need for different types of loans, use the mortgage prequalification calculator to estimate how much home you can afford: