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How to Figure Out How Much House You Can Afford

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Purchasing your house is one of the biggest decisions you’ll ever make, so you want to make sure it’s a smart one. Figuring out how much house you can afford is the first step in doing just that.

There are some ballpark guidelines for figuring out home affordability. Of course, you want to weigh them against your own unique situation, but these rules can at least start you in the right direction.

THE 20 PERCENT DOWN PAYMENT RULE 

One quick way to figure out how much home you can afford is to consider how much you’ve saved for a down payment. Most experts recommend putting down 20 percent. So if you have about $50,000 saved, you can afford a $250,000 home.

Of course, this is easier said than done. For most of us, 20 percent is a big chunk of change. However, putting down that amount has a number of benefits: You take out a smaller loan (so you pay less in interest), your monthly mortgage payments are lower, and you can avoid paying private mortgage insurance (PMI).

THE 2.5 TIMES YOUR INCOME RULE

Another general guideline: Your home should be no more than 2.5 times your gross income. If you earn $50,000 a year, that would mean your home affordability is $125,000.

Whereas the 20 percent down payment rule is focused on your savings, this rule is focused on another important factor: your cash flow.

THE 30 PERCENT BUDGET-BASED RULE

According to this rule, housing should make up no more than 30 percent of your gross monthly budget (some experts, it's worth stating, think the 30 percent figure is baloney, while others believe this number should be even lower, around 25 percent). However, housing costs go beyond a monthly mortgage. Don’t forget to include your insurance, property taxes, maintenance costs, and so on in your calculations. Those expenses add up quite a bit.

WHERE THESE RULES FALL SHORT

Again, these are ballpark rules, so there’s a lot they don’t consider. For example, the 20 percent rule doesn’t take your income into account at all. You may have $50,000 saved, but if you earn a low income, buying a $250,000 home probably isn’t a good idea.

On the flip side, the 2.5 times your income rule obviously considers your cash flow, but it doesn’t take into account how much you have saved or what your job stability is like. And none of these rules consider your net worth. If you’re nearing retirement, for example, and you don’t have much saved, it’s probably a better idea to focus on that.

OTHER FACTORS TO CONSIDER

For a better idea of what you can actually afford based on your own situation, you’ll want to consider the following factors:

Long-Term Cost: Many people forget to consider the massive long-term cost that comes with buying a home. The interest alone can add up to hundreds of thousands of dollars over time, not to mention the insurance, taxes, HOA fees, and other ongoing expenses. In some cases, those extra costs make renting a smarter option. The New York Times has a handy calculator that helps you weigh the long-term cost of renting against the long-term cost of buying a home to tell you at what price point buying might be the better option.

Your Own Financial Picture: Many people stretch their finances to afford a home only to find themselves “house poor” later. This basically means you have the house, but you can’t afford the rest of your living expenses. To avoid this, make sure you have a healthy savings cushion. You should have an emergency fund with at least a few months' worth of living expenses saved, and you should also be on track for retirement. This is where the 30 percent rule comes in handy, too—housing costs shouldn’t eat up the majority of your income.

Lender Criteria: Knowing how your lender decides your home affordability can give you an idea of how to make that decision for yourself. Here are a few basic factors they consider:

Debt-to-Income Ratio: This is how your monthly debt obligations and expenses compare to your monthly income—the lower, the better. Lenders don’t want the bulk of your cash tied up in addressing debt.

Credit History: If you have a solid credit score and a good history of making payments on time, that indicates you have decent financial habits, which means you’re likely to make your mortgage payments.

Down Payment: The more you put down, the higher your mortgage qualification amount. You can put down less than 20 percent, but, of course, that means you’ll take out a larger loan and you’ll have to pay PMI.

Housing Costs vs. Income: Like the 30 percent rule, lenders want to make sure your housing costs don’t overwhelm your income. If most of your income goes toward housing costs, there’s a bigger risk that you won’t be able to pay your loan if a financial emergency arises.

If there’s one thing we learned from the housing crisis, it’s to make our own decisions about how much home we can afford. So before signing on any dotted lines, do the math.

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8 Odd Items People Have Used to Decorate Christmas Trees
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Decorating a Christmas tree is a time-honored holiday tradition. But the ornaments that adorned the firs of yore looked a lot different than the colorful bulbs that are likely hanging from your tree right now. And some of them squawked! From ears of corn to live canaries, these old-school trimmings didn't make the jump to modern times.

1. FRUIT

An apple hangs from a Christmas tree
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For centuries, fruit—in many forms—was used to decorate Christmas trees. One legend even directly connects the modern red ornament to the fruit on these old trees. The story goes that in the village of Meisenthal in modern France, residents decorated Christmas trees with a small apple varietal. A drought destroyed the crop in 1858 and red glass baubles were created to fill the gap.

2. FANCY CAKES

Apples aren't the only edibles that have found their way onto Christmas trees. An 1896 Good Housekeeping article noted that, “The fancily frosted cakes in different designs found at German bakeries look well on a tree and are inexpensive ... Candy strawberries look very pretty, but several dozen will be required to make an effective display. They should be suspended near the tips of the branches.”

3. EARS OF CORN

Ear of Yellow Corn In Field Ready for Harvest
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A 1907 Harper’s Bazar (as it was originally spelled) article advised country children who couldn’t get store-bought decorations to make their own “gingerbread or doughnut animals, men, and birds” and use the ever-popular “ears of corn silvered for icicles.”

4. FAUX BIRD NESTS

In 1877's The Girls’ Home Book, writer Laura Valentine suggested that a fake bird nest would make a lovely decoration, and directed tree trimmers to “Get the cook to give you some halves of unboiled egg-shells. Dip them in white of egg (but first you must have some moss ready); make a hollow of moss in your hand, and put the half-shell in it. The moss will adhere to the outside very well ... Line it in the inside with feathers, and when dry, put sugar-plum eggs in it. These nests look charming in the foliage of the Christmas tree.”

5. LIVE BIRDS

A canary sits in a Christmas tree
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An 1895 Western Journal of Education article is full of tips on how to trim the perfect Christmas tree. Alongside solid advice (don’t light candles on the tree as they’re “more or less dangerous”) and old standbys ('old but effective' popcorn strings), they also had a slightly livelier idea: “Live canaries or mocking-birds, in small cages, are very pretty hung in trees or suspended about the room.” But if that doesn’t appeal, “stuffed birds can also be perched in trees, and a white dove or a larger bird, with wings spread, can be suspended over a tree with very pretty effect.”

6. FAKE SNOW

In 1896, Good Housekeeping had an "updated" idea for the strings of popcorn found on many trees: “[Popcorn] is much prettier and more effective when pinned to the tree, than when strung as is usually the case. Certainly, it requires more labor, but the result is so gratifying that I hardly think you would again return to the old method of stringing the corn.” Just get popcorn and very cheap pins and then pin each individual popped kernel to the tree, and “your tree will look as though [it's] covered with snow, and will present a fine appearance without any further decorations.”

Don’t have time to spend days pinning popcorn to your tree but still want to create the popular Victorian Christmas Snow Tree? A 1978 issue of The Old-House Journal explained that “all one needs is last year’s Christmas tree, glue, cotton batting, and patience.” They then advised spraying the tree a dark gold color so it looks more alive, tearing the batting into strips, and draping the strips over the tree. As for the glue? That’s for the next step.

7. TOXIC SPARKLES

A sparkling Christmas tree
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That glue was important for making your tree sparkle. Instructions in the Western Journal of Education (1895) advised applying glue to the tree and then scattering mica on it to create a spectacular dazzle. Sadly, 80 years later, The Old-House Journal was lamenting that “mica snow ... has all but disappeared from the market and may take some searching to find.” (Perhaps because, as a safety data sheet for mica says, “The substance is toxic to lungs [and] mucous membranes. Repeated or prolonged exposure to the substance can produce target organs damage.”)

The Girls’ Home Book had an alternate idea for these mica-less days, suggesting “[a] very pretty mode of ornamenting the Christmas tree is to hang small garlands or bunches of crystallized leaves ... on the branches.” Just take some pieces of fir branches and suspend them into a bucket filled with alum. Pour in a gallon of boiling water and a day later you have twigs that glitter like diamonds. (More safety warnings: “Breathing of dust may aggravate acute or chronic asthma and chronic pulmonary disease.” [PDF])

But the desire for a sparkly tree goes back much further than the 19th century, and didn’t always require safety warnings. One chronicler recorded that during the reign of Henry VIII there was a banquet for Epiphany (January 6th) that featured a glistening mountain topped with “a tree of gold, the branches and boughs [wrought into ornamental patterns] with gold, spreading on every side over the mountain with roses and pomegranates.”

8. PRESENTS

Present hanging from a Christmas tree
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In 1896, Good Housekeeping explained to its readers that “If the [Christmas] tree is placed in a carpeted room it would be well to previously cover the floor immediately surrounding the tree, with white paper or spread a sheet” on the floor, which all seems perfectly normal by today’s standards ... until the next paragraph. “It would be pretty,” the magazine continues, “to arrange the gifts about the base of the tree instead of hanging them upon the tree as is customary amongst Americans.”

Throughout the mid to late 19th century, there are references to hanging Christmas presents from the tree. “To save expense, yet at the same time to insure a brilliant effect, it is a good plan to hang the gifts so that bright contrasting colors may set off the tree," Ladies’ Home Journal suggested in 1890. "Bundles done up in brown paper are never pretty; but dolls, bright-covered books, gayly painted toys, bright silk handkerchiefs and white scarfs, sleds, wagons, etc. should be placed in prominent view.” An 1856 issue of Guardian (a magazine for “young men and ladies”) proclaimed that “the various presents, shine in the branches, which almost bend under their kind burdens,” which even included “a staff for grand-pa, and a pair of spectacles for grandmother.”

What killed off this tradition? There are many possibilities, but an 1894 issue of The Cultivator & Country Gentleman has a strangely familiar suggestion from a reader: “A pretty Christmas tree is pretty without decoration, and yet, after it has been stripped of its load of presents, it looks bare unless it has some trimming. In Germany the shining balls and the like are carefully put away each year, a few new ones being added from year to year, and one of the delights of Christmas is the bringing out of these treasures. We have tried this plan and find it works excellently.”

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Cook Your Next Out-of-This-World Meal in a Cosmic Le Creuset Dutch Oven
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Le Creuset

Le Creuset, one of the most coveted names in cookware, has given its classic Dutch oven a stellar makeover. As delish reports, the updated item is decorated with the image of a starry night sky.

The pot’s midnight blue exterior is scattered with white and yellow stars. The print, which is known as “cosmos,” is one of the brand’s boldest looks yet.

Le Creuset Dutch ovens have gained a cult following for their durable cast iron hardware and iconic design. The enameled equipment comes in several vibrant colors, including pink, turquoise, and the company’s signature orange.

While Le Creuset has produced patterned pots in the past, they’re usually hard to come by. Earlier this year, it released limited-edition soup pots inspired by Disney’s Beauty and the Beast. This latest product appears to be sticking around for the foreseeable future, but shoppers are still limited in their options. The cosmos look is only available as a 4.5-quart round oven and it's exclusively sold by Bloomingdale's. If you’re looking to gift this to a heavenly home cook in your life, it will cost you $380—about $80 more than a regular Le Creuset oven of the same size.

Space-printed cookware.

Space-printed cookware.

[h/t delish]

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