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As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a...

As an individual who earns $125,000 annual income. What is the recommended budget when purchasing a new home. Not assuming taxes, interest,

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Answer #1

If the decision has to be taken to buy the house based on the amount of annual income, then the 2.5 times of annual income has to be implemented. It states that a person can afford a house that is worth 2.5 times of his/her annual income. In this case, the individual earns $125,000 then he/she can have a budgeted amount of 2.5 times the annual income i.e. $312,500.

Budgeted amount = $125,000 X 2.5

= $312,500

This is a very general rule. The decision will be influenced by many other factors like interest rate, market conditions, taxes, credit score etc.

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