How Much Can I Afford to Spend on My Mortgage?

Consider current debt obligations in mortgage affordability calculations.
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Home ownership should be a joy rather than an overwhelming burden. You can keep the scales tipped in your financial favor by opting for the most affordable mortgage. To avoid a struggle to make your payments, consider your debts, income and surprise circumstances that could make paying your mortgage difficult.


Your income is a primary factor in figuring out how much you can spend on your mortgage. To determine the maximum amount you can afford, add your annual income to your partner's and multiply this number by .28. The result is 28 percent of your income and the maximum amount most lenders expect you to contribute to a mortgage. To determine the monthly amount you can afford, divide 28 percent of your income by 12.


Lenders also consider how deep you are in debt when evaluating how much mortgage you can afford. Generally, your debts, including your mortgage payment and expenses like mortgage insurance and property taxes shouldn't amount to more than 36 percent of your income. Calculate 36 percent of your income by multiplying your income by .36. If your debt payments amount to more than 36 percent of your income, you're biting off more than you can chew.

An Aggressive Formula

Some lenders use a more aggressive formula for determining mortgage affordability. They set the maximum mortgage payment at 33 percent. If, for example, you earn $80,000, your maximum mortgage payment for the year should be $26,400 or $2200 a month.

Down Payment

Afford more house by putting down a larger down payment. Making a larger down payment reduces the amount owed on the mortgage and results in a lower monthly payment. In addition, you can avoid the expense of private mortgage insurance by making a down payment of at least 20 percent.

Unforeseen Circumstances

No matter how well you plan, Murphy's Law may catch up with you on occasion. Building a savings account may help you weather these storms and feel more comfortable about taking on a mortgage. In addition, you may prepare for the unexpected by choosing a mortgage you or your partner can handle on one income. This way, you won't lose your home if one of you is temporarily unemployed.

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