How Much of My Income Should I Spend on My Mortgage Payment?

Good mortgage to income ratios depend on your personal circumstances.

28% of Your Income, 36% Total Debt

Many mortgage lenders use the 28/36 ratio to determine how much house you can afford. The idea is that you shouldn't spend more than 28 percent of your gross monthly income on your mortgage. In addition, your total debt payments each month, including your mortgage, car payments, student loans and other bills should not be more than 36 percent of your monthly income.

You May Need to be More Conservative

While ratios are fine and dandy, they are no substitute for carefully considering your own circumstances. If you have concerns about your job's stability, have or are planning a large family, or are coping with special medical needs, consider delaying homeownership or buying a less-expensive house.

Bottom Line

Standard mortgage calculation ratios can be helpful guides, but they are no substitute for a realistic assessment of your personal situation. When deciding on a mortgage amount, consider every aspect of your life, including your job, family size, hobbies and retirement prospects before making a final decision.

References

• Salary.com: Income and Mortgage Size
• MSN Money: Don't Bite Off Too Much House