
Knowing What You Can Afford
You can easily determine how much house you can afford by following a few general guidelines: Your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not be more than 28 percent of your gross monthly income (before taxes). This is your housing expense ratio. Ideally, your total monthly debt obligation should not exceed 36 percent of your gross income, though exceptions are sometimes made. Total debt includes the mortgage payment plus other obligations such as