How to Know How Much You Should Pay for a Monthly Mortgage

Figuring out how much you can afford in a monthly mortgage payment is one of the most important steps in the home buying process. A lot of people make the mistake of focusing only on the price of the home, but the real question should be: What’s my monthly comfort zone? Let’s break it down.

Start with Your Rent

If you’re currently renting, you’ve got a built-in starting point. Ask yourself how your current rent feels. On a scale from 1 to 5, where do you land?

  1. If paying your rent feels like you could do it in your sleep, you’re a 1.
  2. On the other hand, if making rent every month leaves you feeling house-broke, you’re a 5.

If you’re somewhere in the middle—let’s say you’re paying $1,800 a month and it feels like a 3—then you’ve got some wiggle room. You can afford a little more if needed, but you also know not to go too far beyond that comfort zone.

Here is a quick video overview:

 

Reverse Engineer Your Budget

Once you’ve pinpointed where your rent falls on the scale, you’ve got a solid base to work from. A good real estate agent and lender can take your current rent and reverse-engineer it to help determine what you could afford in a mortgage. If you let them know how much you have saved or how much you’re planning to use as a down payment, they can give you a ballpark idea of your affordability.

This approach helps you avoid setting unrealistic expectations. Instead of going into the home buying process with your dream home in mind (and a price tag that might be out of reach), you go in with a clear understanding of what your budget looks like month-to-month.

Factor in More Than Just the Mortgage

It’s easy to think your mortgage payment will just replace your rent, but don’t forget to account for other homeownership costs like:

  • Property taxes
  • Insurance
  • Maintenance and repairs

These add up, so it's crucial to be aware of them while determining your overall affordability.

Want to Know Your Monthly Affordability?

Before you start shopping around for homes, it’s smart to figure out exactly what you can afford month-to-month. Use this affordability calculator to get a clearer picture of your mortgage affordability. You’ll be able to adjust based on your income, savings, and potential down payment, helping you enter the home buying process with confidence.