What kind of house can I afford with my salary?

Human beings are self-sufficient animals. When we set a goal, we look for the most efficient methods to achieve it. Furthermore, from a young age, we develop a clear aptitude for ingenuity.

Imagine yourself in the school playground, having to divide the sweets among your friends: what did you do? You used the old-fashioned method of "counting it by ear." But now that we're older, what's the best way to figure out what mortgage you can afford?

Pay attention, because we're going to show you how you can do it.

In 2025, the conditions for buying a home are changing the game: interest rates and rising housing prices are here to stay. That's why the question "what kind of house can I buy with my salary?" is more relevant than ever.

This is where concepts like your borrowing capacity and the impact of the three types of interest rates—fixed, variable, or mixed—come into play. Understanding these terms is crucial because a miscalculation could prevent you from buying the house you love.

Are you ready?

A house isn't built from the roof down: get to know the PRD and PER

Love me, love me not. Orange or lemon. Buy or rent. Some answers come from the heart, while others require a little more information. For example, is it advisable to rent a house instead of buying one?

Before we talk about mortgage calculations, we want to help you determine if buying is the best option. And here, we'll focus on two indicators that might seem like a bunch of pop culture references, but which will actually help us make the best decision.

In the case of a mortgage, most experts recommend that the monthly payment should not exceed 30%-35% of net income, allocating the remaining 65% to meet other needs, such as food, clothing, leisure and savings.

PRD : Compare the purchase price of a home with the cost of renting it for a year. It's a simple division between the home's price and your equivalent annual rent.

If the result is less than 15, buying is usually more profitable than renting. If it's between 15 and 20, it depends on other personal factors or market expectations; however, if the result is greater than 20, renting is the solution.

Let's do the same exercise with that house you want to buy, compared to the bargain rental you're living in. On the one hand, you pay €22,000 a year in rent, and on the other, the house costs you €285,000. Drumroll, please… the result is 12.95!

What does this mean? It means your situation seems favorable for buying, but you still need to consider other factors. For example, the P/E ratio.

What is the maximum mortgage I can request?

The amount we can allocate to buying a home will be determined by what is called debt capacity , that is, the amount of income you can allocate to paying off debts.

In the case of a mortgage, most experts recommend that the monthly payment should not exceed 30%-35% of net income , allocating the remaining 65% to meet other needs, such as food, clothing, leisure and savings.

Thus, for example, a worker with an income of around €1,000 should assume a mortgage of, at most, €350 per month; while another person with a net salary of €2,000 could face a mortgage of up to €700 per month.

Estimated application fees associated with obtaining a mortgage

If you want to go to an unknown destination, go to page 54. Do you remember those adventure books where you traveled from one page to another without knowing what the future held? Well, a mortgage, without planning, can be the same: a labyrinth of corridors that you have to navigate without order to find the exit.

To help you avoid this, we're going to explain all the expenses you might encounter. This way, your calculations will be much more accurate. Regarding expenses prior to taking out a mortgage, we highlight the following:

• Appraiser : To get a mortgage off to a good start, it's important to have your home appraised. So, set aside between €250 and €600 for an official appraisal.
• Notary : Certifying the public deed of the mortgage is free. Well, actually, it costs between €600 and €1000.
• Property deed : Yes, everything in life has to be registered. And, registering your mortgage costs between €200 and €400.
• Gestoría (administrative services ): This isn't mandatory, but it will help you process the paperwork between the notary and the land registry. The fee range is the same as before, between €200 and €400.
• Taxes : It depends on the property. Is it new? In that case, a 10% VAT will apply. For used properties, the Transfer Tax ranges from 6% to 10%.

• Mandatory insurance : keep in mind that you will need home insurance and, in some companies, you must take it out along with others such as life insurance, etc…
• Fees : these can range from the opening fee (approximately 1% of the loan) to the fee for partial or total early repayment.
• Rate review : In variable or mixed mortgages, the payment may change according to the reference index (Euribor).

Everything you need to know about interest: types and examples

Yes, we've noticed it too. A concept has just come into play that can help you save a lot of money, and one that we sometimes overlook. Introducing: interest rates .

Interest is the payment that financial institutions apply to monthly payments to offset the risk we assume when we take out a loan. And this payment can be applied in three different ways:

• Fixed : You always pay the same interest throughout the loan period, making it easier to plan your payments.
• Variable : changes based on a reference index, such as the Euribor or the central bank's reference rate; your installments may go up or down according to this index.
• Mixed: combines both systems; during an initial period you pay a fixed interest rate, and then it becomes variable according to the reference index.

Just as there are things you don't choose, like your first love, there are other decisions that can save you a lot of money. For example, the interest rate. Let's use a table to explain it better.

Lesson of the day: a 1% drop in the interest rate can mean more than €20,000 in savings on the total paid.

Let's visualize this with a variable-rate example. We'll start with a €150,000 mortgage over 25 years, that is, 300 months. We begin with a base rate of 2.5%, which will be adjusted annually according to Euribor +1%.

Based on this example, the monthly payment for the first year would be around €673. If the Euribor rises, let's say, by half a point the following year, the new rate would be 3%. Get ready, the rate is changing. But does it go up much? At this point, the monthly payment would increase to around €699.

And, for example, if the following year the Euribor falls to 2.6%, the fee would also fall, in this case, to €680.

This is an example of how variable interest rates work. Yes, at first it's very attractive, but we're dependent on the uncertainty that the markets offer. You can light a candle to Saint Euribor hoping it doesn't rise, because, without a doubt, the exposure is greater.

To explain it in a more human way, interest rates are like a child learning to walk; you don't know if they'll stay still or keep moving. We don't know what will happen tomorrow, let alone predict what will happen next month. Predictions are made to try to minimize market risk. And in this case, we want to compare with you how we see interest rates in a few months. This way, you can see the risk from a more secure perspective.

• Euribor: The 3-month Euribor is expected to remain around 2.00% until the end of 2025, with a slight downward trend in 2026.
• ECB interest rates : The European Central Bank has reduced its interest rates in 2025, setting the deposit rate at 2%. A final cut is expected in the last quarter of 2025, with the deposit rate reaching 1.75% .

In summary, what should you keep in mind to make a correct calculation?

However, each personal situation is different and there may be factors that vary the final amount of that maximum mortgage depending on the salary.

In this sense, to know what installment you will have to pay for the loan and, therefore, how much you can borrow from a mortgage according to your salary, we must take into account the following aspects:

First of all, there are all the expenses we've already seen: notary fees, administrative fees, taxes…

Secondly, consider your employment and personal situation. You must take into account your current employment status as well as your future employment prospects—whether you have a temporary or permanent contract—and what your career outlook might be. It's important to think ahead, as a mortgage is a long-term commitment.

In addition, it's important to consider other income and debts. To determine the maximum mortgage amount based on your salary, you must analyze your income and expenses.
For example, in addition to your salary, you might also receive a widow's pension or rental income from another property, so your net income will be higher and you can allocate more money to buying a home. The same applies in the opposite case: if you have several additional mortgage payments, dependents, or high medical expenses that require you to spend more money than usual.

Let's see... What kind of house can you buy?

Broadly speaking, the key to knowing which house you can buy involves being clear about the following aspects:

• Monthly payments should not exceed 30% or 35% of our net monthly income in order to be able to afford them.
• We need to have savings of around 35% of the property price, 20% to cover the portion of the property that the lender does not finance (the financing amount usually does not exceed 80% of the appraisal or the purchase price).
• We will allocate 15% to cover expenses.

I'm young, but I also want a house. What can I do?

Sometimes we internalize things so much that we end up believing them. Come on, raise your hand if you've never heard that young people can't afford a home.

Okay, well, I don't know if you're ready, but a myth is about to be shattered.

The only truth in all of this is that a young person, in most cases, has not had the ability to generate the same savings as someone with more than twenty years of experience.

But if experience counts, so do ICO guarantees . Yes, the Official Credit Institute has been providing that financial boost to those under 36 who want to buy a home for years.

In fact, according to its president, Don Manuel Illueca, at the beginning of 2025 they exceeded 300 million in financing to guarantee up to 20% of the mortgage for the purchase of the first home by young people.

In other words, even though the market is volatile, we, as entities and organizations, strive to make everything as stable as possible; so that you can make the right decision.

Therefore, you who are in that beautiful stage called youth: yes, you can buy a house.