Saving, Managing Debt, and Budgeting

Mortgages

What is the general rule for obtaining a home loan?

The general rule is that a good borrower can afford monthly payments—including principal, interest, insurance, and taxes—equal to 25% of his gross income. Some experts believe that you can have a debt income ratio as high as 28% to cover your mortgage, insurance, and taxes. You should also have a total debt income ratio (of all of your debts plus the mortgage payment) of less than 36% if you wish to qualify for a mortgage.