Housing & Bills

How much of my income should go to rent?

The traditional rule is no more than 30% of gross income. In high-cost cities that can be impossible, and many planners now accept up to 35% if other expenses are lean. A more practical test: after rent, can you cover all your fixed expenses and still save something each month? If not, the rent is too high regardless of what the percentage works out to.

How much does a 1% difference in mortgage rate actually cost?

On a $400,000 loan, a 1% rate difference changes your monthly payment by about $240, which is nearly $86,000 over a 30-year term. Even half a percent difference on a $300,000 loan shifts your payment by roughly $90/month. This is why improving your credit score before applying and shopping multiple lenders is worth the effort.

Should I put 20% down on a house?

A 20% down payment eliminates private mortgage insurance (PMI), which typically costs 0.5%–1.5% of the loan per year. If you put down less, you pay PMI until you reach 20% equity. Some programs allow 3%–5% down, which can make sense if saving to 20% would take several years in a rising market. The right number depends on how long it would take to save the difference and what mortgage rate you qualify for.

Does renters insurance cover my roommate too?

Not automatically. Most renters insurance policies cover the named policyholder and household members listed on the policy. Your roommate typically needs their own policy unless they are explicitly added to yours. Each policy costs $15–$25/month and covers personal property, liability, and additional living expenses if the unit becomes uninhabitable.