How to Determine a Monthly Mortgage Payment That Works For You

Along with deciding the location, size, and amenities of your potential new or next home, knowing how much you can expect to pay each month will give you the confidence to find a home that fits your lifestyle and finances.

A good initial rule of thumb is your gross monthly income multiplied by .25. Your gross monthly income is how much you make before taxes or other costs are taken out. If you're buying with a spouse or partner, combine your gross incomes before multiplying.

As an example, if you and your spouse earn the Litchfield County median gross household income of $6,700 per month, multiply this by 0.25 to get your manageable monthly housing payment of $1,675.

Don't Forget the Extras

Be sure to include utilities, taxes, and upkeep costs in your budget. In the previous example, if you determine that your monthly utilities, insurance, and homeowner association fees would total $400, a realistic monthly mortgage payment for you would be $1,275 ($1,675-$400).

How Much House Can You Afford

To adjust this even more for your personal situation, take your revised monthly payment number ($1,275 in the example case), and enter it in a mortgage calculator to find the home price and possible loan type that will make this amount possible for you.

Increase Your Buying Power

A strong credit score and a larger down payment can each reduce the amount you'll have to pay monthly. Focus on paying down existing debt on time, and set a down payment goal that you save towards each month.

See how much home you can afford using National Iron Bank's loan calculator tools. Let the experts at National Iron Bank help meet your first time homebuyer needs. Click here to learn more!