One of the most common questions people have is “How much mortgage can I afford?”
While there is no easy rule of thumb on this one because it also depends on how much other debt and bills you have…here is the best guideline I can give:
No more than 30% of your income should be used to for your mortgage payment.
Here is a simple equation to get your appropriate amount:
(Gross Yearly Income X 30%) divided by 12.
For example, if you make $100,000 a year: $100,000 X .30 = $30,000.
$30,000 / 12 = $2,500 mortgage payment.
Again, you should also take into consideration your other bills and debt. So if you make $100,000 a year and drive a Ferrari…you probably can afford a $2,500 mortgage payment.
No one wants to end up house poor so I urge you to always try to be reasonable when looking for a new home!
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