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Your monthly housing budget is the amount you have to live, finance and heat your future home, after you have fulfilled all your other normal obligations. To do this, use current data that will not change when you are a new homeowner: your net household income, your debts (student loan, car loan, and so on) and your current living expenses (food, clothing, insurance, miscellaneous expenses, and so on).

The difference between your net household income and your total monthly expenses is your monthly housing budget. This amount must cover your mortgage pay- ment (principal plus interest), taxes, heating costs and condominium fees, if applicable.

Remember that a budget is only useful if it reflects reality. Your budget, more than the methods used to calculate your monthly payments, will help you determine your maximum mortgage loan.

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