Mortgage Loan - How Much Can You Afford?
When it comes time to start thinking about buying a house, the #1 thing you will be thinking about is the cost of the home and what you can afford. An affordability calculator is a great step in figuring this out.
The 28/36 Income Rule
One rule of thumb that a lot of lenders use to assess how much you can qualify for is the 28/36 rule. The rule is that your mortgage payment, which should include insurance and taxes, shouldn’t be more than 28% of your pre-taxed income.
The 36% comes from your debt or anything you owe to anyone. Your total debt should not exceed 36% of your pre-taxed income.
And remember; just because you are approved, doesn’t mean that you can afford it or should buy it. You should never buy anything out of your means if you cannot afford it or if it’s over your budget.