Question 1

How much house can I afford?

Accepted Answer

Most lenders use the 28/36 rule: your monthly housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36% of gross income. On a $80,000 annual income, this means a maximum housing payment of about $1,867/month and total debt payments of $2,400/month. Use the affordability calculator above for a personalized estimate based on your income, debts, and down payment.

Question 2

What is PMI and when do I need it?

Accepted Answer

Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20% of the home price. PMI typically costs 0.5–1.5% of your loan amount annually, added to your monthly payment. On a $400,000 home with 10% down ($40,000), PMI might add $150–$250/month. PMI is automatically cancelled when your loan balance reaches 78% of the original home value, or you can request cancellation at 80%.

Question 3

Should I get a 15 or 30 year mortgage?

Accepted Answer

A 15-year mortgage has higher monthly payments but a lower interest rate and saves dramatically on total interest. A 30-year mortgage has lower monthly payments and more flexibility. On a $400,000 loan at typical rates, a 15-year mortgage might save $150,000+ in interest but cost $800–$1,000 more per month. The right choice depends on your cash flow, other financial goals, and how long you plan to stay in the home. Use the 15 vs 30 year comparison tab for a detailed side-by-side analysis.

Question 4

What is a good cap rate for an investment property?

Accepted Answer

Cap rates vary significantly by market and property type. In major coastal markets (NYC, SF, LA), cap rates of 3–5% are common. In Midwest and Sun Belt markets, 6–9% is more typical. A cap rate above 8% in a stable market generally indicates a strong cash-flowing investment. Cap rate alone doesn't tell the full story — always calculate cash-on-cash return based on your actual financing terms.

Question 5

How much can I make on Airbnb?

Accepted Answer

Short-term rental income varies dramatically by market, property size, and listing quality. Top vacation markets like beach towns, ski resorts, and major cities can generate $3,000–$8,000/month for a 2-bedroom property. Suburban and rural markets typically earn $1,500–$3,500/month. Use the STR Estimator tab to get market-specific estimates for your property type and location.

Question 6

What are the requirements for an FHA loan?

Accepted Answer

FHA loans require a minimum 3.5% down payment with a credit score of 580+, or 10% down with a score of 500–579. The property must be your primary residence. FHA loans have mortgage insurance premiums (MIP) for the life of the loan if your down payment is less than 10%. FHA loan limits vary by county — use the First-Time Buyer tab to check your eligibility and current limits.

Question 7

What is cash-on-cash return for rental property?

Accepted Answer

Cash-on-cash return measures your annual pre-tax cash flow as a percentage of your total cash invested (down payment + closing costs + initial repairs). For example, if you invested $80,000 and generate $6,400 in annual cash flow, your cash-on-cash return is 8%. Most experienced investors target 8–12% cash-on-cash return. Unlike cap rate, cash-on-cash accounts for your specific financing terms.

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