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How much mortgage should you take for buying home

Updated on June 28, 2012

How much should you borrow for your dream home

The first question which comes to your mind when you buy your home is how much should you spend to buy your home. As most of the fund comes through mortgage unless you are super rich, it is very important to plan your mortgage properly. As I am also planning to buy my first home, I thought of sharing my knowledge with you which I received from friends, advisers and various other sources.

Planning for your home mortgage is a big pain however this pain can be reduced if you plan carefully. There are too many questions involved, how much should you borrow, which is the best bank, interest rate, tenure of mortgage, hidden charges, prepayment etc etc... I will try to answer only the first question here and leave the rest for later.


So, how much should you borrow. Although it may looks simple to answer this in the way that it should be the difference between the price of property and the money you already have in your pocket, But its not that simple as it looks to be. Let see how...

  • Firstly even before you start looking for dream home, you should know how much you can comfortably pay each month towards mortgage from your salary. It again in turn depends upon your current situation, whether you are married or single, if single, are you planning to get married in near future. If you are already married, then do you have kids, how may kids you are planning to have in next 5 years. You should be able to answers most of it if not all.

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  • You should also consider about your income in near future. Are you going to get promoted soon, is you job secure, are you planning to change your job or occupation, how stable is the market of your profession.
  • You should also think of arranging the money from other source where you may not require to pay any interest or very low interest. Can you borrow some money from your parents, relatives or friends for which you may not have to pay any interest? Can you get soft loan from your company? Always try to minimize the amount that you need to borrow from Bank.

Always try to learn from the experience of your friends and relatives. Talk to them and try to find out about how they managed to plan their mortgage, did they face any problem, if they faced then what are the ways to mitigate them. Its not bad to take professional advise also even if you have to pay some consultation fee.


I am sure, its not easy to find answers to all the questions above. But these are some of the parameters on which you can base your thinking. In the end I will give a simple advise, plan your mortgage in such a way that the monthly loan amount do not comes to more than 30-35% of your monthly income. On a more broader front, plan for a total mortgage amount which is not more than income of your next 5 years.

I hope, this hub may have helped you to plan for your dream house. Best of luck and take care!


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    • profile image


      9 years ago

      very good hub content. Worth reading for. Thanks!

    • profile image


      9 years ago

      Thanks for the mortgage info and industry insight


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