Jill and Ray have combined annual gross earnings of $36,700. What is the
maximum amount they should consider spending for the purchase of a
house?
There is no specific rule for determining the maximum amount to spend on a house as it can vary depending on individual financial circumstances. However, a common guideline is that your total housing costs should not exceed 30% of your gross monthly income.
To calculate the maximum amount Jill and Ray should consider spending on a house, we need to calculate their gross monthly income:
Gross Monthly Income = (Combined Annual Gross Earnings) / 12 months
Gross Monthly Income = $36,700 / 12 months = $3,058.33
Now, multiplying their gross monthly income by 30% will give us the maximum amount they should consider spending on housing costs:
Maximum Housing Costs = Gross Monthly Income * 30%
Maximum Housing Costs = $3,058.33 * 0.30 = $917.50
Therefore, Jill and Ray should consider spending a maximum of $917.50 per month on housing costs.