How much of my income should go to my mortgage?​ 

Whether you’re saving for your first home or considering refinancing for better terms, finding the right balance between your income and monthly mortgage payment is key to feeling financially secure.  

But how do you figure out what you can afford without stretching your budget too thin? It all comes down to the percentage of your income you dedicate to your mortgage payment. 

Are you ready to explore ways to secure a mortgage and embark on your homeownership journey? Check out pre-approval options to get started today! 

How much should the payment on my house be? 

Most lenders use certain rules of thumb to determine how much mortgage you can afford based on your income, debts and expenses. These guidelines are not one-size-fits-all formulas, but they give homebuyers a good starting point.  

One of the most widely used models is the 28%/36% rule. 

The idea is simple: Your monthly housing payment, which includes your principal, interest, property taxes and homeowners insurance, shouldn’t exceed 28% of your gross monthly income. 

On top of that, your total monthly debt payments, including credit cards, auto loans and student loans, should stay under 36% of your gross monthly income.  

For example, if your gross monthly income is $6,000, your housing costs shouldn’t exceed $1,680, and your total debt obligations should stay below $2,160. Lenders use these ratios to ensure you’re not taking on too much debt, reducing the risk of financial hardship. 

What percentage of my income should go toward my mortgage? 

For most potential homebuyers, the 28%/36% rule is a good starting place. 

However, if you have a particularly strong credit score or a higher gross annual income, you may qualify for more flexible guidelines such as the 35%/45% rule. This allows you to dedicate up to 35% of your pre-tax monthly income to housing costs and up to 45% to total debt payments. 

While this approach lets you afford more house, it’s not for everyone. It works best for borrowers with stable, high-paying jobs who can handle additional expenses like real estate taxes and maintenance costs without dipping into their savings. 

Conversely, if you like to play it safe, the 25% rule might be a better fit. This model suggests that no more than 25% of your take-home pay go toward housing expenses. 

This approach keeps your budget flexible, leaving room for things like unexpected medical bills, child support or even that summer vacation you have planned. While it might limit how much mortgage you qualify for, it’s a solid choice for long-term financial stability. 

What’s the maximum mortgage I can afford on my salary? 

A home affordability calculator could help you determine how much you can afford each month using figures like your income and debts. 

Are there income requirements for a mortgage? 

Keep in mind that there’s a difference between the maximum you can afford and what you’re comfortable spending. As a general rule of thumb, the 28%/36% rule is a good gauge to help determine how much you can afford as well as keep you in a spending range that’s comfortable.    
Are there income requirements for a mortgage? 

There generally isn’t a single number that can be cited as an income requirement when you apply to qualify for a home loan.  

Of course, you’ll have to supply proof of steady income. But the type of loan you choose, the sale price and location of the home, and your credit score and debt-to-income ratio all will affect how much you could qualify to borrow.  

Which factors go into a monthly mortgage payment? 

Your monthly mortgage payment is made up of several parts, often expressed as PITI, or principal, interest, taxes and insurance.  

Principal is the total amount you borrowed with your home loan. If you buy a $600,000 house with a $75,000 down payment, you would need a $525,000 mortgage. That $525,000 is your principal, which you will pay off over the course of the loan. 

Interest is what mortgage lenders charge on every home loan they extend, which is then built into your monthly payments. Most of the money you spend on your housing costs will go to the loan principal and mortgage interest. Given the importance of interest in your total housing costs, be sure to take a look at current interest rates before choosing a lender. And remember, you may be able to refinance at a later date to take advantage of lower rates. 

Taxes are something every homeowner needs to pay, and those expenses are usually included in your monthly housing costs. With each payment you make, a portion is set aside in escrow to cover your tax obligations. 

Homeowners insurance is required by mortgage lenders for every borrower before approving a home loan. Homeowners insurance provides coverage in case your house is damaged by fire, storms or other hazards, while also helping recoup the costs of replacing lost, stolen or damaged possessions.  

Can I spend more than the recommended percentage of my income on a mortgage payment? 

You can spend more than the recommended percentage of your income, but it’s a move that could come with some financial risks. The most widely used model, the 28%/36% rule, is designed to allow you to afford a home with enough cushion for other living expenses, emergencies, savings and investments. 

How can I start the mortgage process today? 

One initial and key step you should consider is getting a mortgage pre-approval. This process helps you understand how much money a lender may allow you to borrow. It is based on factors such as your income, debts, and credit score and history. 

Beyond the purchase price, remember to factor in additional costs like closing fees, home inspections and moving expenses. These can add up, but knowing what you need upfront can help you plan more accurately.  

If you’re ready to explore your homeownership options, apply for a mortgage pre-approval today! 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.}