Use this Balance Sheet as an example of how to determine generally what you can afford to pay for housing. See your lender for a more exact figure or to confirm your findings. This is just a very general idea of how to prepare a Balance Sheet. Your Balance Sheet should be much more detailed and include all of your monthly expenditures.
Monthly Housing Allowance
1. Annual Income on IRS return before taxes $_______________
2. Divide this by 12 to determine /12
your Gross Monthly Income =$_______________
3. Multiply your Gross Monthly Income
by .28 (lenders allow you to spend up to 28% X .28%
of your income on housing)
4. This is your Monthly Housing Allowance =$_______________
Monthly Debt
* Add together all monthly obligations
* Credit card balances $_______________
* Car payment +$_______________
* Child support +$_______________
* Other loans +$_______________
* Other +$_______________
* Other +$_______________
5. Total Monthly Debt =$_______________
Most lenders only allow 36% of Gross Monthly Income to be spent for all Monthly Debt.
Multiply Gross Monthly Income (Line 2) by 36% $_______________
X36%
6. equal your Monthly Debt Allowance =$_______________
Subtract Monthly Debt (Line 5) -$_______________
7. Equals Monthly Housing Debt Allowance =$_______________
8. Put the smaller number of line 4 and line 7 here $_______________
This is your Monthly Maximum Allowed House Payment
**The Lender will loan you only enough money that will cause your total monthly house payment to be no more than this amount.