Remember: This is just a ballpark figure! Don’t forget that grown-up stuff like property taxes and home insurance will top off your monthly payment with another few hundred dollars or so. To save yourself the time and headache of doing a ton of math, use our handy-dandy mortgage calculator. See how much house you can afford with our free mortgage calculator! But if you're anything like me, you probably broke a sweat just reading that formula. Sure, you could crunch the numbers yourself by dividing a home price by 180 months (that's a 15-year mortgage) and then multiplying the decreasing monthly principal balance by your interest rate. Use our mortgage calculator to determine your home budget. Stick to that number and you’ll have plenty of room in your budget to tackle other financial goals, like investing for retirement or saving for your kid’s college.Ģ. (That includes the principal, property taxes, HOA fees, etc.) According to the 25% rule I mentioned, that means your monthly house payment should be no more than $1,250. Let’s say you earn $5,000 a month (after taxes). I want your home to be a blessing, not a curse. Following this rule keeps you safe from buying too much house and ending up house poor. To calculate how much house you can afford, use the 25% rule: Never spend more than 25% of your monthly take-home pay (after tax) on monthly mortgage payments. To calculate how much home you can afford, simply follow these five steps. After all, shopping for your “home sweet home” will feel very unifying and exciting once you both have a shared vision. You need to be on the same page when it comes to your budget and what’s realistic for your money situation. (I’ve never lost a patient!)Īnd for you married folks, make sure you and your spouse look at the results together. To figure out how much house you can afford, all you need to do is crunch a few numbers. How to Calculate How Much House You Can Afford
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