Mortgage companies often use the following rules of thumb in assessing whether a mortgage or refinancing package will be offered to a prospective client. |
| Consumer Debt
(credit cards, auto loans and personal lines of credit)
20% or less of gross monthly income Housing Costs
(principal, interest, taxes,
fees and home owners insurance)
28% or less of gross monthly income Total Debt
36% or less of gross monthly income If you are paid by the week, then multiply your weekly wage by 4.33 Example - $400.00 per week X 4.33 = $1732.00 of monthly income The same would be for any weekly payments. Example - average weekly food bill $102.85 X 4.33 = monthly food costs The reason for this is that there are 13 weeks in every quarter. |
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A budget is a tool used to plan and evaluate spending patterns. Budgeting reveals wasteful or inefficient spending patterns. A budget may also be used for meeting savings and wealth accumulation goals such as, college funding, vacation and retirement planning or even buying a new car.
You are about to view a Home Budget Analysis Calculator. Make sure you study the illustaration shown, it is an excellent guide for doing your own budget. Note that the Target Payment Percentages come pretty close to the rule of thumb used by Mortgage Brokers when assessing a client's ability for purchasing a home - 28% for Housing Costs and 36% for Total Debt. These targets are used as a guide for you so that your expenses will never exceed your income. Please view the bottom line " Total Available for Savings" of the Monthly Expense Breakdown to see for yourself. Managing your monthly budget can be difficult and frustrating. One of the most important aspects of controlling your budget is to determine where your money is going. This calculator helps you do just that. By entering your income and monthly expenditures, you can see how much you have left to save and where your money is being spent. In addition, you can click the "view report" button to compare your budget breakdown to our targets, which can help identify areas for improvement. The trick to debt control is to SPEND LESS than you make and buy only what you need, not what you want. | 
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