How To Determine How Much You Can Afford To Spend On A Mortgage

How can I determine how much I can afford to spend on a mortgage?

When mortgage lenders make loans, they use a formula called the 2836 formula. They look at the amount of your mortgage payment plus additional costs, like the taxes or insurance that you have to pay, and they like that to be no more than 28 percent of your total gross pay per month. They like your total debt repayment to be no more than 36 percent of your total gross income per month. That's a formula that you can use, but of course, as always, it's about how much you feel comfortable with. Don't take on more debt than you can afford, or that you're going to feel comfortable with.