How to Calculate a Comfortable Monthly Mortgage Budget

Feb 11

Buying a home is an exciting journey, but ensuring you can comfortably afford your monthly mortgage is key to long-term financial stability. Here’s a step-by-step guide to help you determine a mortgage budget that fits your lifestyle and financial goals.

1. Determine Your Take-Home Income

Start by gathering your most recent paychecks to calculate your monthly take-home income. If you’re purchasing with a partner, combine both incomes. This figure forms the base for calculating your housing budget.

2. Subtract Fixed Monthly Expenses

Next, list out your fixed expenses—these are costs that remain constant each month, such as:

Student loan payments
Utilities
Car payments
Insurance premiums (health, auto, home, life, etc.)

Subtracting these from your income gives you a clearer picture of how much remains for housing and other discretionary spending.

3. Review Variable Expenses

Variable expenses fluctuate month to month, so reviewing your recent bank and credit card statements can help you estimate an average. Common variable expenses include:

Groceries
Subscriptions (streaming services, gym memberships, etc.)
Dining out
Entertainment

By subtracting these from your income, you further narrow down what’s available for a mortgage payment.

4. Account for Future Expenses

Many buyers overlook future expenses, which can impact affordability in the long run. Consider:

Starting a family and potential childcare costs
Increasing retirement contributions
Upcoming travel plans
Home maintenance and repair costs
Emergency savings contributions

Setting aside an estimated amount for these expenses ensures you don’t stretch your budget too thin.

5. Determine Your Comfortable Mortgage Amount

After deducting all fixed, variable, and anticipated future expenses, the remaining amount represents a realistic estimate of what you can comfortably spend on your mortgage each month. This final number helps you set expectations when house hunting and avoid financial strain.

By following these steps, you’ll make a well-informed decision about how much house you can afford, allowing you to enjoy your new home with confidence and peace of mind!

Need help finding a home within your budget?

Contact me today for expert guidance and personalized recommendations!

Missy Brown