When you apply for a mortgage, the banks calculate how much they will lend based on both your income and your expenses. So the more you’re committed to spend each month, the less you can borrow.
As a rule-of-thumb and only as a rule-of-thumb, your monthy payments should not exceed 25% of your monthy income.
You can use this 25 % number to estimate how much mortgage lenders might offer you. This is a very rough estimate, and any significant expenses, such as child expenses, debt repayments or school fees, could reduce the amount a lender’s prepared to offer you.
You won’t get a fully accurate figure until you apply for a mortgage, but if you speak to a mortgage broker – or a lender, they should be able to give you an estimate. Better yet, get pre-approved. In fact, like your home hunting, you shoud also do some home mortgage shopping. Get estimates. Not just one estimate, many!
How Much Can I Borrow ?
Just enter 25% of your monthy income in the “Input payment” field and click on the “Calculate Principal” button of this US Mortgage Calculator (below).
You can also change the Interest Rate, the Amortization length (in months), the term of the mortgage loan (how long before you can renegotiate the mortgage), and the Payment type.
