But the good news is that no matter whats happening with the economy, there are moves you can make to make sure that you can comfortably afford your dream home when the right one comes along. 

That starts with having a clear idea of your financial situation and how much buying power your annual income can afford you. 

Factors that could be hurting your buying power   

As it stands, the most recent data from the Fed shows that the average median sales price of houses sold in the U.S. stood at $467,700 in the final quarter of 2022. In the second half of 2022, higher-than-normal interest rates pushed U.S. home prices down 2.5% from their 2022 peak. 

The catch: This decline was preceded by a 30% increase in home prices between 2022 and 2022. To add insult to injury, the cost of everyday expenses are on the rise and could make it increasingly difficult for homebuyers to cover the upfront costs of buying a home. The final Consumer Price Index (CPI) for December 2022 did signal a slowdown in overall prices, according to the Labor Department. However, some major indexes saw a slight increase in December, including the shelter, household furnishings and operations, motor vehicle insurance, recreation, and apparel indexes.

How much do you need to make to afford a $600,000 home? 

Experts have several guidelines for determining how much income you need to earn to comfortably afford a home within a certain budget. 

Your home value shouldnt be more than two or two-and-a-half times your salary. This means if youre making $100,000, you shouldnt purchase a home with a value of $200,000 or $250,000, says Dan R. Hill, certified financial planner, AIF, and president of Hill Wealth Strategies in Richmond, VA. 

Following this logic, in order to afford a $600,000 home, your income would need to be at least $350,000 per year, or higher. Other rules say you should aim to spend less than 28% of your pre-tax monthly income on a mortgage, says Hill. 

These are just general guidelines, and the exact amount you can afford to comfortably pay each month will depend on your financial obligations and goals.

However, using the 28/36 rule as your framework for setting a budgetyou should aim to have a mortgage payment that does not exceed 28% of your total monthly gross income, also known as your front-end ratio. The rule also holds that your total debt payments should be no more than 36% of your total monthly income. 

Say youre interested in purchasing a new home. 

• Your purchase price: $600,000
• Down payment: $36,000 (or 6% of the total purchase price, the average amount for first-time buyers)
• Loan term: 30 years at a fixed-rate 
• Loan interest rate: 6.50% (the average rate as of February 10, 2023) 

Your total monthly mortgage payment would be around $3,565 per month. 

To calculate if you can comfortably afford that payment, youll need to know your front and back-end ratios. Your front-end ratio is the percentage of your monthly income that goes toward your mortgage payment. Your back-end ratio is the percentage of your income allocated toward paying other debts. 

This means that your gross income would need to be a minimum of $156,000 per yearor around $13,000 per monthto keep your monthly mortgage payment below that 28% threshold and have a little wiggle room ($13,000 x 0.28 = $3,640). Its important to note that other homeownership costs like your property taxes, homeowners insurance, and homeowners association costs can all skew your budget and account for a greater portion of your income. 

Before buying a home, consider the following 

You can use the previously mentioned 28/36 rule to give you a general idea of how much you could expect to pay for a home within a certain price range. But knowing how much realistically fits into your budget will require further considerations, including: 

1. Your other debt obligations. The other half of the 28/36 rule requires you to think carefully about your other debt obligations, like your credit card bill, student loan, car payment, etc. What does your repayment timeline look like for those debt payments? Will those payments increase over time? These are all questions youll want to ask yourself before deciding that you can afford a certain monthly payment. 
2. How your income will change over time. Its impossible to predict how your income will change over time, so its important to take the 28% rule with a grain of salt. Like any good guideline, the 28% rule works well in a vacuum, says Ted Braun, CFP senior vice president and financial advisor at Wealth Enhancement Group. However, it fails to consider other important factors such as future income increases, temporary spending needsthink daycare, college savings, or even taking care of a loved one. Your best bet is to budget for a home that falls well below the 28% threshold to give yourself extra breathing room in case you experience changes in your income or unexpected expenses crop up.
3. Additional homeownership costs. When youre shopping for a new home, dont be fooled by the purchase price. Other costs such as immediate home improvements, insurance, property taxes, and maintenance can all hike up the annual costs of owning your home. The costs do not just include things within the home, property taxes and homeowners insurance are a very big component as well, says Braun. You may work very hard to find the perfect home in the perfect neighborhood, just to find out the property taxes are going to cost you another $1,000 per month. 

The takeaway 

Before you set a budget for your purchase, take stock of your monthly budget and financial obligations to determine how your estimated mortgage payment could fit into that budgetor not. You might find that a higher payment will slow down your progress on other financial goals, or that youll need to continue saving for a larger down payment before you can comfortably afford your mortgage payment. 

Planning for the purchase of a home is just as important as planning for any other major financial decision, and failure to adequately budget can lead to devastating consequences, says Braun. Spend the time, build a plan, and test scenarios until you have 100% confidence in what you are about to embark on.

The legislation, which now awaits the governors signature, would require DeSantis to appoint a five-member board to oversee the government services it provides in the companys sprawling properties in Florida.

The vote on the Disney bill ended a special legislative session focused on the conservative agenda of a governor who has leveraged political tensions on gender identity, sexual orientation and immigration to become a national GOP star and potential White House contender.

The session itself, which was hastily called and completed, also signaled DeSantis willingness to leverage the Republican supermajority in the statehouse to accomplish his political goals, a strategy he will continue in the coming months ahead of his expected presidential candidacy.

The Disney district takeover was initiated last year when Disney publicly opposed Dont Say Gay, which bars instruction on sexual orientation and gender identity in kindergarten through third grade and lessons deemed not age-appropriate.

DeSantis moved to penalize the company, directing lawmakers to dissolve the district during a special legislative session in April, beginning a closely watched restructuring process.

Last week, the Republican leaders of the House and Senate, in coordination with the governor, ordered lawmakers to return for another special session to complete the state takeover of the district.

This all seems a retaliation by the governor for Disney voicing its support for the LGBTQ community, Democratic Sen. Linda Stewart said Friday before the bills passage.

The measure also changes the districts name from the Reedy Creek Improvement District to the Central Florida Tourism Oversight District and subjects it to various layers of state oversight. Board members are currently named through entities controlled by Disney.

The bill leaves the district and its financial abilities and debt obligations intact, addressing a chief concern of surrounding governments. It also prevents people who have worked with or contracted with a theme park in the past three years from serving on the districts new governing board.

Having a separate government allows the district to issue bonds and provide zoning, fire protection, utilities and infrastructure services on its land. Republican critics of the district argue it gives Disney a commercial advantage unavailable to others.

This bill takes an old district and modernized it and updated it, said Republican Rep. Fred Hawkins, the bill sponsor. It took rights away that no corporation should have in being able to construct or have an unfair competitive advantage over its competitors.

The creation of the district was instrumental in the companys decision to build near Orlando in the 1960s.

Disney officials had told the state they planned to build a futuristic city that would include a transit system and urban planning innovations, so the company needed autonomy in building and deciding how to use the land. The futuristic city never materialized and instead morphed into a second theme park that opened in 1982.

Separately on Friday, Republicans in the House gave final passage to two bills that amount to technical fixes to key DeSantis initiatives on immigration and voter fraud. The proposals now move to the governors office to be signed into law.

One bill is meant to cut off a legal challenge to the governors migrant relocation program, which began last year when DeSantis used taxpayer dollars to fly a group of South American migrants from Texas to the liberal enclave resort island of Marthas Vineyard.

The trip drew legal questions because the administration paid for the flight using money intended to remove migrants who were located in Florida, not migrants who were in any other state.

The legislation creates a dedicated program in the governors office on migrant relocation and specifies that future flights could move migrants from anywhere in the U.S. The measure increases the likelihood of additional trips as DeSantis continues his criticism of federal border policy along his path to an expected 2024 presidential bid.

Republicans have repeatedly said the bill would help migrants by taking them to sanctuary cities and states, while Democrats have slammed the program as a political stunt meant to serve the governors political ambitions.

The other proposal is meant to strengthen the prosecutorial power of the governors election police unit, clarifying in state law that the statewide prosecutor has authority to prosecute election crimes in federal and state races.

This ensures fraud will be investigated and prosecuted to the fullest extent of the law, as it should, said Republican Rep. Juan Alfonso Fernandez-Barquin.

Some cases tied to the election police unit have been dismissed by judges who said the statewide prosecutor did not have jurisdiction to bring charges.

DeSantis pushed lawmakers to create the election police unit last year to address Republican concerns about voter fraud, which have proliferated among conservatives following former President Donald Trumps false claims that he reelection was stolen.

The unit, housed in the governors department of state, reviews fraud allegations and conducts preliminary investigations, with a special group of state police officers who pursue violations.

Democrats have said the unit is meant to dissuade people from voting and that it is unnecessary since local prosecutors can investigate and charge voter fraud.

This is a fear tactic and its voter suppression, plain and simple, said Rep. Dianne Hart, a Democrat.

DeSantis is expected to sign the bills into law. Lawmakers will return to Tallahassee in early March for their regular legislative session, where they are expected to approve another slate of DeSantis priorities on guns, education, capital punishment and abortion.

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