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How Much Mortgage Can I Afford?

How Much Mortgage Can I Afford?
Betsalel Cohen
UpdatedMay 14, 2024
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    5 min read

Finding a Mortgage You Can Afford

Can You Afford a Mortgage: Budget, Income and Debt

If you are renting or looking to buy a bigger home, then you will need to consider how much money you can afford to pay each month toward your housing expenses. Don’t account only for the principal and interest payments on the new mortgage. Include your monthly costs for will include your mortgage payments, property tax, homeowner insurance, and possibly mortgage insurance and homeowner association fees.


Keeping a budget takes time and preparation, but will aid you in reaching your financial goals. Check out budget guide for help in starting and/or maintaining a monthly budget.

Here are some of the things you need to consider before you decide if you can afford the mortgage and monthly payments:

  1. Income: How much are you making each month on a regular basis? Is your income stable? Do you rely on overtime pay which might not always be available?
  2. Expenses: How much are your monthly expenses? Don’t forget to include seasonal and non-regular expenses. Some bills are not paid monthly, but need to be accounted for in your monthly budget.
  3. Debt: How much are your monthly debt payments? This includes your credit card debt, auto loans, student loans, personal loans and court ordered payments. If you have loans that are in deferment, then will you be able to afford the full payment together with your mortgage payments?
  4. Savings: Do you have an emergency fund? Do you have sufficient funds saved for a down payment and closing costs?
Quick tip

Learn today’s mortgage rates and offers through mortgage rate tables. You can get a personalized quote based on your financial situation.

Can I afford this Mortgage? - From the Mortgage Lender’s Eyes

Feeling comfortable with your monthly payment is important. Never take a mortgage unless you’re confident that the monthly payments fit within your budget. Mortgage payments are not flexible and must be paid on-time each and every month. Your lender is going to take a snapshot of your current income and expenses. Lenders don’t account for future financial plans that will impact your ability to make your payment, such as college expenses or private schooling for your kids. That’s your responsibility.

It isn’t enough that you feel comfortable with your mortgage and monthly payments. You need to be able to pass the various tests and rules that mortgage lenders use to qualify you for a mortgage. Here are some of the basic questions that a lender will ask to verify if you can afford the mortgage:

  1. Income: Do you have stable income? Usually lenders look to see that you have two years of steady employment. If you just changed jobs, then bring this up with the lender. Changing professions might require a new two year period.
  2. Debt: Are you paying your debts on time? Is your debt level rising? Are you using up more of your credit lines? Be careful not to take on new debt or even apply for other credit, while you are in the mortgage application process.
  3. Debt-to-Income ratio (DTI): What is your debt-to-income ratio (DTI)? There are many different DTI rule,s depending on the specific mortgage loan program you apply for and the lender’s own rules. A general rule of thumb is that your housing expenses (mortgage payment, mortgage insurance, property tax, homeowners insurance) should not be over 20-25% and your total debt payments (housing expenses and other monthly debt payments) should not be over 36%.
  4. Savings: Do you have down payment money saved and can you show where it came from? If it is gift money, your lender is going to ask you to document how long ago your received the gift. Do you have savings (reserves) to cover a few monthly payments? (Check with the lender what they require, but it is always a good idea to have an emergency fund).

The image below shows you the components a lender looks at to determine your monthly debt load. For more information read the article about mortgage and creditworthiness.

Debt to Income Ratio
Quick tip

Get a mortgage quote from a mortgage provider.

Can I Afford This Mortgage - Your Checklist

Here is a handy checklist to help make sure that you are taking into account all the factors that determine if you can afford the mortgage:

Complete?CategoryTipsYour Information
Savings (or qualified gifts) for a Down PaymentAll FHA loans require mortgage insurance; however with a 20% down payment, you can avoid Private Mortgage Insurance on a conventional loan.
Emergency Fund SavingsMake sure that you have at least 6 months of living expenses to cover emergencies.
Monthly Debt (includes auto loans, credit cards, student loans, and court ordered payments)Pay off your credit cards monthly and avoid taking on new debt at the time you are applying for a mortgage.
Housing Expenses (check for the rates that are relevant for the area and property you are interested in purchasing).Property Tax Homeowners Insurance Homeowner Association Fee (or other costs)

Mortgage affordability checklist. Source: is preparing a detailed mortgage affordability calculator. In the meantime, take advantage of mortgage affordability worksheets. You can choose between:

  1. Can I afford this mortgage? Based on a specific home price.
  2. Can I afford this mortgage? Based on your income and your desired down payment/loan to value ratio.
Bills Action Plan

Plan, prepare, and make sure you buy a home with a mortgage payment you can afford. With mortgage rates rising, be extra careful. A house and mortgage payment you can afford today may become unaffordable if rates continue to rise.

Here are some steps to help you prepare:

  1. Prepare your budget.
  2. Keep your debt payments as low as possible, avoiding the minimum payment cycle.
  3. Learn how to qualify for a mortgage and Get pre-approved for a loan.
  4. Learn about mortgage rates today
Quick tip

Get a mortgage quote from a mortgage provider.

Mortgage market update: the latest

It is expected that mortgage rates are subject to change. Homebuyers and those refinancing their mortgages should pay close attention to the latest mortgage rate

Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 is 6.88%. This represents a 6 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
According to Freddie Mac, the 15-year mortgage rate for April 10, 2024 is 6.16%. This is a 10 basis points increase from last week’s rates.

What does the mortgage rate mean for you?
Mortgage rates play a vital role in determining your monthly payment. Let's take a look at the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:

  • For a 30-year conventional loan, the interest rate is 7.09%.
  • If you opt for a 15-year conventional loan, the interest rate stands at 6.29%.
    Using the rates mentioned above, a $279,082 30-year-year mortgage would result in a monthly payment of $1,874. On the other hand, a 15-year mortgage would require a monthly payment of approximately $2,399.

Simplify your mortgage journey: Shop around and get pre-approved today!
To make the home-buying or refinancing process a breeze, we highly recommend shopping around for mortgages and getting pre-approved. So, why not Check Out mortgage rates now for the best options available.



LLeonard Creation, Apr, 2015

Should I allow my DTI to go as high as 45%.

BBills Staff, Apr, 2015

Not such a good idea. I suggest that you check your Budget.

EEthan Ewing, Jul, 2014
Definitely think lenders should lower their minimum credit score requirements! We need to get more people in to homes.
LLydia Cohen, Jul, 2014

I found a home, but interest rates went up. Can I still afford a mortgage? (Ch)

GGuajo Lote, Feb, 2014
It doesn't look like I can afford ANY loan!