The good news if you are a prudent borrower with your salary you should be able to find a nice home to live in.
Banks used a 28/36 front to back end ratio when they consider whether to lend to a prospective borrower.
This means that you should be spending more than 28% of your gross pay on your housing costs and your total debt should not cost more than 36% of your gross pay.
To work out how much house you can afford take your annual salary and multiply it by 3.5 times,
this will give you the high end in how much house you can afford.
Ratchet that number down to be more strict on yourself.
assuming you do use 3.5x you should be able to afford a house that costs:
If you live in the US this is well above the $180,000 national average.
If you live in Canada the average is in the $344,000 range right now so that`s a little below but if you live in a small urban center or rural community that will still buy a nice home.
Breaking down the costs assuming you use a 10% down payment (should use 20%)
you will need to borrow $226,800 from a bank.
If you amortize using a fixed 25 year mortgage at 4.75% your monthly mortgage cost will be $1,286.99.
You need to factor in property taxes (0.5 to 4 percent),
utilities like water and electricity,
internet and home insurance and you can expect to pay quite a bit more than that monthly to cover your monthly housing costs.
Since you make $72,000 a year that`s $6,000 a month in gross salary.
Using our example your mortgage alone would take up 21% of your gross pay meaning you have about an 8% window that all the other costs we outlined must fit into.