H.O.M.E.* Housing Costs: How much can you afford? *Home Ownership Made Easier An extension publication of the Department of Economics and Housing New York State College of Human Ecology Cornell University Ithaca, NY 14853 Guidelines Just how well do these old guidelines apply to you in today's housing market? Housing should take about 25% of your gross pay or 35% of your take-home pay. When buying a home, look for something priced at 2.5 times your gross income. Let's take a look at an average household with an average income. Early in 1988, the average gross income for US households was about $27,000; the average net income was about $24,580, based on the US Department of fair credit reporting act credit card Labor's Consumer Expenditure Survey. Using the first rule of thumb, a household should be spending about $562 to $717 per month on shelter, utilities, and other housing- related expenses. If this same average household wanted to buy a house, according to the second rule of thumb, they should be looking in the $67,500 price range. These budgets and prices may be practical in Buffalo, where the rent for an average two-bedroom apartment is $405 and the median price of a home is $55,000. In the lower Hudson Valley, however, where the average rent is about $740 and the median price of a home is $220,000, the average credit rating credit card family probably will not be able to afford the desired housing using these rules of thumb. Obviously, the old rules of thumb are not applicable in many of today's housing markets. The reality is that households spend between 21 and 54% of their gross income on housing, depending on age and income level. Total Costs of Shelter When thinking about how much you can afford, it's important to keep in mind not only the rent or mortgage payments but also all the other costs of running a household. These expenses include taxes, insurance, utilities, household operations (cleaning sup plies, postage stamps and the like), home furnishings and equipment, household maintenance credit card credit card and repairs, yard and garden supplies, and expenses related to remodeling or home improvements. The average annual expenditure in the Northeast for utilities, household operations, and furnishings in 1988 was about $265 per month. The average total cost of shelter in 1988 in the Northeast was about $648 per month. Your non-mortgage housing expense will depend on your lifestyle and the energy efficiency of your home. If your home is energy efficient, you may be able to afford a higher mortgage because your monthly utility costs will be lower. Your total shelter costs may be about the same, but they will be divided differently between the mortgage and uk secured loan credit card utility payments. The Lender's