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

Your debt obligations affect the amount of your income you can spend on a mortgage.

If you are thinking of buying a home, then knowing how much of your income can go toward your mortgage payment is an important part of the process -- it determines how much home you can afford.

Percentage of Income

Bankrate advises home buyers to put no more than 28 percent of their gross monthly income into a mortgage payment. The 28 percent includes principal on the mortgage, plus interest, property taxes and homeowners' insurance.

Debt Ratio

If you have other debt obligations, such as student loans, car loans or sizable credit card loans, your mortgage payment may need to be less than 28 percent. "In general, your total monthly debt obligation should not exceed 36 percent of your gross income," Bankrate advises.

Considerations

The percentage or amount of your monthly income that goes toward a mortgage payment is dependent upon other factors, including how much other debt you owe. If you have large car payments, lots of student loans or child support payments, these eat into the amount of mortgage payment you can safely afford.

References

• Bankrate: How Much House Can You Buy?

Resources

• HUD: Buy a Home