Housing Payments Calculator at Catch a Gideon

October 20th, 2006 by digerati

This page at CNN Money allows you to calculate the total monthly cost of purchasing a home. You input the cost of the home, interest rate, down payment and taxes, and it calculates the monthly payment you can expect.

It is important to know how much you will have to pay monthly, as that is easier to figure out how it will impact your lifestyle. Most people cannot think of how much they spend over a year, but they can break it down monthly. (Perhaps because we pay bills monthly?)

CNN says we should spend a maxmum of 28% of our income on housing costs, and a max of 36% on debt. They also recommend that you find a home to purcahse that is 2.5 times your annual income. Unfortunetly I think for many of us that is wishful thinking. Here in DC I’d say most of my friends (recently graduated) make about $40,000 per year. Therefore the home they “should” look at would cost $100,000. I haven’t seen anything at that price within 50 miles of DC since I moved here.

Are lower income people destined to rent? I suspect that over the next 5 years most of these same people will be making closer to $60,000. That puts their home price at only $150k, still rediculously low this area. Any ideas? I’m a little stunned as well since the average American household makes about $65k per year.