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2: Size Up Your Housing Situation

Calculate Your Housing Costs

Taxes clipboard with calculator wallet cash coins credit cardThere are varying guidelines for how much to spend on housing, but it all begins with your income. How much you make will determine what you can afford. Use the Housing Costs Worksheet to calculate your housing costs:

  • Total all of your monthly housing expenses
    • If you are renting, include your rent, utilities and renters insurance.
    • If you own, include your mortgage, property taxes, homeowners insurance and homeowners association (HOA) fees.
  • Divide this figure by your gross monthly income (before taxes and any other adjustments).
  • The amount, expressed as a percentage, shows how much of your earnings are used to pay for housing.

For example:

Monthly housing expenses = $1,300

Monthly gross income = $4,000

1,300 / 4,000 = 0.325

(move the decimal two places to the right)

= 32.5 percent

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