Mortgage Example
How Much Mortgage Can I Afford on $1,500/Month?
Working backwards from a $1,500 monthly budget to find the maximum mortgage amount.
Scenario
Target monthly P&I: $1,500. Rate: 7.0%, 30-year term.
Inputs
Target Payment$1,500/month
Rate7.0%
Term30 years
Results
Max Loan Amount~$225,000
Home Price (20% down)~$281,000
Total Interest (30yr)~$315,000
Explanation
At 7% APR, $1,500/month supports roughly a $225k mortgage. With 20% down, that corresponds to a ~$281k home. Most lenders also cap total debt payments at 43% of gross income (DTI ratio).
Key Takeaways
- If you earn $60k/year, $1,500/month is 30% of gross — typically acceptable.
- Don't forget property tax, insurance, HOA — budget $300–600/month more.