## How do you calculate affordability for a mortgage?

Key factors in calculating affordability are 1) your monthly income; 2) available funds to cover your down payment and closing costs; 3) your monthly expenses; 4) your credit profile. Income – Money that you receive on a regular basis, such as your salary or income from investments.

## How much house can I afford to buy with 25% down?

Following Kaplan’s 25 percent rule, a more reasonable housing budget would be $1,400 per month. So taking into account homeowners insurance and property taxes, you’d be better off sticking to a mortgage of $240,000 or less. If you have enough for a 20 percent down payment, the maximum house you can afford is $300,000.

## How much of a mortgage can you afford?

The amount of mortgage you can afford also depends on the down payment you make when buying a home. “In a perfect world, we recommend a 20 percent down payment to avoid paying mortgage insurance,” Neeley says. When your down payment is less than 20 percent, your costs rise.

## How much should I have in reserve for my mortgage payment?

A good affordability rule of thumb is to have three months of your housing payments, including your monthly expenses, in reserve. This will give you an additional buffer for covering your mortgage payment in case there is some unexpected event.