How to Determine the Maximum Mortgage Payment You Can Afford
Buying your first home is an exciting time! It’s a big milestone in your life and you want to make sure you do it right. Part of doing it right is making sure you can afford the monthly mortgage payment. In this guide, we’ll give you some tips on how to calculate the maximum amount you can spend on your mortgage payment each month, and expand your financial literacy in Australia.
- Start with your monthly income
The first step is to figure out what your monthly income is. This includes your regular salary or wages, any bonuses or commission payments, and any other sources of income. Once you have your monthly income figured out, you can start to figure out how much of that you can realistically afford to put towards your mortgage payments.
- Next, consider your other expenses
In addition to your regular monthly income, you also need to consider your other expenses when determining how much you can afford to spend on your mortgage payment. This includes things like credit card payments, student loan payments, car payments, childcare expenses, and any other regular monthly bills. You’ll want to add up all of these expenses and subtract them from your total monthly income to get an idea of how much money you have left over for your mortgage payment each month.
- Now you can calculate your maximum mortgage payment
Once you know how much money you have left over after covering all of your other expenses each month, you can start to calculate your maximum mortgage payment. A good rule of thumb is that your mortgage payment should not be more than 28% of your gross monthly income. So, if your monthly income is $4000, then your maximum mortgage payment would be $1120.
Of course, this is just a general guideline and you may be able to qualify for a higher mortgage payment depending on factors like credit score and down payment size. But it’s a good starting point for budgeting purposes.
Calculate your maximum monthly mortgage payments today
Buying a house is a huge financial decision and it’s important that you understand what you can afford before beginning the homebuying process. By following the steps outlined in this guide, you can get a better idea of the maximum mortgage payment you can afford each month. This will help make sure that you’re comfortable with your new home purchase and avoid any financial stress down the road. Good luck!