Purchasing a home is the biggest investment most families will make. Buying a home that’s within your family’s budget will ensure there aren’t any problems getting the mortgage paid on time each month and providing the basic necessities for the family at the same time.
Most mortgage experts suggest that a mortgage payment shouldn’t exceed 28 percent family’s monthly gross income. In addition, the family’s debt-to-income ratio should be no more than 36 percent. A debt-to-income ratio is how much of a family’s monthly gross income must be paid on debt.
It’s common to see lenders require a mortgage applicant have a debt-to-income ratio of 28/36, which means that each month the expected mortgage payment for a family with a $45,000 yearly income should not exceed $1,050. This means that the maximum home price would be $180,000.