Today we are going to answer the question, “what is a mortgage and how high is too high?” A mortgage is a loan you use to buy a home or property. You borrow money from a lender and pay it back over time, usually with interest. Most mortgages are spread out over 15 to 30 years. The monthly payment includes the loan amount, interest, taxes, and insurance. It sounds simple, but how do you know if your mortgage is too high?

First, look at your income. Experts say your monthly housing costs shouldn’t be more than 28% of your gross income. For example, if you make $5,000 a month, aim to keep your housing costs under $1,400. This helps you balance other bills, savings, and goals.

Next, think about your debt. Adding a mortgage to credit cards, car loans, or student loans can strain your finances. Lenders often recommend keeping total debts under 36% of your income. If your mortgage pushes you over, it might be too high.

Finally, plan for the future. What if you lose a job or face unexpected expenses? A mortgage that feels fine now could become overwhelming later. Consider creating a budget that leaves room for savings and emergencies.

For example, Sarah bought a home with a $1,800 monthly mortgage. But when her car needed major repairs, she had to dip into her emergency fund. Keeping her housing costs closer to $1,400 would have helped her avoid stress.

In the end, a mortgage is too high if it leaves you feeling stretched. Stay within your limits, and you’ll enjoy your home without financial headaches.

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