Question

Matthew is 26 years old and works as a nurse practitioner. He is married with one child and wants to buy a house so his family has more space.
Matthew’s total household income is $156,000 per year ($13,000 per month)
Matthew and his wife Iris both have student loans totaling $190,000. Their monthly payments are $2,015.
Matthew is 26 years old and works as a nurse practitioner. He is married with one child and wants to buy a house so his family has more space.
Matthew’s total household income is $156,000 per year ($13,000 per month)
Matthew and his wife Iris both have student loans totaling $190,000. Their monthly payments are $2,015.
1.Using the rule of 3, how much house can he afford?


2.Follow the steps to use the 28-36 rule.
Find his max housing budget (28% of his monthly income)


3.Find his max total monthly debts (36% of his monthly income)


4.Subtract his existing monthly debts from his max total debts.


5. Choose the LOWEST value. What monthly housing costs can he afford?

answer all the questions

Answer 1

Below are the calculations and results.

Given: monthly gross income = $13,000; student loan payment = $2,015/month.

1) Rule of 3
- House price = 3 × annual income = 3 × $156,000 = $468,000.

2) 28% rule (max housing budget)
- 28% of monthly income = 0.28 × $13,000 = $3,640/month.

3) 36% rule (max total monthly debts)
- 36% of monthly income = 0.36 × $13,000 = $4,680/month.

4) Available for housing after existing debts
- Max total debts minus current debts = $4,680 − $2,015 = $2,665/month available for housing.

5) Choose the lower value
- Compare 28% housing cap ($3,640) and remaining capacity after debts ($2,665): the lower is $2,665/month.

Answer summary
- Rule-of-3 estimated purchase price: $468,000.
- Max housing payment by 28% rule: $3,640/month.
- Max total debt capacity by 36% rule: $4,680/month.
- Available for housing after student loans: $2,665/month.
- Recommended monthly housing cost (conservative per 28/36 rule): $2,665/month.

Note: The 28% figure typically intends to include PITI (principal, interest, taxes, insurance). These are guideline calculations — actual mortgage approval depends on interest rate, down payment, credit score, property taxes, insurance, HOA fees, and lender requirements.