How Much Should You Spend on a Home?

Angled picture of a house with a for sale sign in the front yard.With a variety of mortgage loan options available, a strong credit score and positive credit history can give you a lot of buying power. But, how much should you consider spending on a home? 

Financial planners recommend: 

  • Less than 2.5 times your gross annual salary or income

A reasonably priced home should cost less than 2.5 times your annual gross income, the amount you earn from all sources before taxes. . If you have significant debt, like student loans, you may need to adjust your price range to leave room in your budget for other loan payments. 


  • Less than 30% of your take home pay

Another rule of thumb is to have your total monthly housing expense – including your new mortgage payment, property taxes, home insurance and mortgage insurance – make up no more than 30% of your take home (after tax) income. 

These are just rules of thumb, but they can help you avoid taking out a mortgage loan that is bigger than what you can reasonably afford. Want to run the numbers? Use our online mortgage calculators . For more money tips and tricks, visit the Education Center and follow Ent YouTube.