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How Much Home Can You Afford in New York City?

Before you start poring over real estate listings, take time for this reality check: How much house can you afford? For example, if your income totals $100,000 a year, this means you can afford a home worth $300,000. “The general rule of thumb is that you can purchase a home that costs about three times your annual salary," says Harrine Freeman, a financial expert and the owner of H.E. The way to factor in your income and debts is called your debt-to-income ratio, or DTI. If, for example, your monthly income is $6,000 and your debt $500, then your DTI is 8.3% ($500/$6,000 = 8.3%). Add in a mortgage to your debts, and your DTI shifts considerably. How a home affordability calculator can help Not good with numbers? Just punch in your income, debt, even your dream neighborhood, and it will tell you what price of home you can afford. Keep in mind that this is just a ballpark start: To get a more fine-tuned assessment, contact a lender, who will sit down with you for free, take a look at your finances, and help you figure out how large a home loan you can handle. So before you get your heart set on a deluxe apartment beyond your financial reach, figure out what’s realistic—and prep your finances so they’re in great shape to make a purchase.