Thinking about buying a home? 🏡 One of the first questions people ask is:
“How much money do I need to make to get approved for a mortgage?”
Great question! Let’s break it down in simple terms so you can know what to expect before you apply.
🧮 The 28/36 Rule (Quick Math)
Most lenders use something called the 28/36 rule to decide how much house you can afford:
- 28% of your income → can go toward your mortgage payment (this includes principal, interest, taxes, and insurance).
- 36% of your income → is the maximum allowed for all your debts combined (credit cards, car loans, student loans, plus your mortgage).
💡 Example
Let’s say you make $5,000 a month (before taxes):
- 28% of $5,000 = $1,400 → That’s the max monthly mortgage payment a lender might approve.
- If you have other debts (like $400 for a car loan), that counts toward the 36% limit, which means your mortgage portion might need to be lower.
🏦 Other Factors Lenders Look At
Income is just one piece of the puzzle. Lenders also check:
- Credit score: Higher scores = better rates and approval chances
- Down payment: Bigger down payment = smaller mortgage needed
- Job stability: Steady employment shows you can handle payments
- Interest rates: The higher the rate, the higher your monthly payment
📊 Rough Income Guide
Here’s a ballpark idea (assuming little other debt and good credit):
- Home price $200,000 → Need ~$50,000/year income
- Home price $300,000 → Need ~$75,000/year income
- Home price $400,000 → Need ~$100,000/year income
(These estimates assume a standard 30-year fixed mortgage with a modest down payment and average interest rates.)
✅ Tips to Boost Approval Chances
- Pay off high-interest debts first
- Save for a bigger down payment
- Improve your credit score
- Avoid big purchases before applying (like a new car)
💬 Final Word
There’s no one-size-fits-all answer because every lender and every buyer is different. But using the 28/36 rule gives you a clear starting point.
Before house hunting, talk to a lender or mortgage broker for a pre-approval—they’ll crunch the numbers and tell you exactly what you can afford. That way, you shop with confidence and no surprises.