The mortgage industry uses a formula to calculate the maximum amount one would qualify for. This is your blended mortgage payment (principal and interest), property taxes, heat, and debt payments (credit cards, car payments and other loans) in comparison to your gross income. However, that calculation does not factor in other lifestyle costs like bills, gas, groceries, daycare, tuition, entertainment, etc and does not consider your NET (take-home) pay.
When planning the amount of mortgage you can afford – think of the bigger picture.
I never suggest that my clients become ‘house poor’ or over-commit themselves. It’s important to know your overall budget and lifestyle when deciding how much per month you want to spend on a comfortable mortgage payment