How much should you budget for your first mortgage?
If you are at a place in your life when it’s time to finally buy your own home, you may be left wondering what percentage of your income should you spend on your monthly mortgage payment? No problem, we’re here to help!
Figuring out your budget
Your mortgage should be less than 29% of your income.
The first thing you need to do is find a loan lender to offer you a mortgage. This will likely be your bank.
Your lender will be able to tell you what he or she thinks you can afford for a mortgage payment. Commonly, lenders like to keep your mortgage payment at 29% of your income or below, although some will let you go to 40% (this is risky, I would avoid it).
When searching for a house you can comfortably afford, it’s important to remember that having a down payment of at least 20% of the purchase price will drastically minimize your insurance requirements. Having said this, many lenders will allow you to purchase your home with a MUCH smaller down payment (again this is risky, I would avoid it).
