Over the weekend, I watched the ABC special “Un-Broke.” It was entertaining, but as one might expect, I didn’t agree with everything that was presented. One of the things I took issue with was the idea that your mortgage payment should be 1/3 (about 33%) of your gross monthly income. There are two things that I would do differently in order to provide better safety:

1. Use net (after tax) income instead of gross income.

2. Figure on 28%.

Using your net income means that you are working with money that you actually have in hand. Using the 28% gives you wiggle room, and allows you the better interest rates that come with a 28/36 qualifying ratio. Personally, my husband and I have our mortgage payment at 25% of our monthly income. It means that if something happens to our income, or if we have a financial emergency, our home is less at risk, since it accounts for a smaller portion of our income.

Recent financial events have made it painfully obvious that we vitally need to pay attention to what is going on with our mortgages, and that it is time to cut back to more modest homes.

What percentage of your monthly income is spent on a mortgage payment?