As we have told you on other occasions, buying a house will be one of the most important decisions we will make throughout our lives. When we set out on that path, we do so with the hope of finding what will be our home or that of our family and, in most cases, we are very clear about what we want and where we want it. What is clear is that when we find the house that fits our needs we will face a big question: What house can I afford?
In our post today we will try to give you some clues to respond appropriately to this question.
What house can I afford depending on the % of income I contribute?
Experts recommend that our monthly mortgage payments should not exceed 30% or 40% of our monthly net income . In fact, this is the percentage that most financial institutions use to determine the financial capacity of their clients and to know if they will be able to comfortably assume the payment of the mortgage. To calculate it, divide your annual net income by 12 and multiply it by 0.4. The resulting figure is the maximum monthly payment that you should pay on your mortgage.
Maximum rate = annual net income / 12 x 0.4
And how much money do I have to have saved?
The previous question is directly related to the amount of money we have saved. Obviously, the greater our personal contribution, the lower the amount we will have to request from the entity and, therefore, the lower our payments will be. It would be advisable to have between 15 and 20% of the price of the house saved.
If you do not have savings, it is best to postpone the purchase of that home until you have sufficient savings or continue looking for another one that suits your means.