I've been thinking about buying a house but want to make sure that I'm realistically in a good price range. About what percentage of my income should I be devoting to mortgage payments as well as insurance and taxes?
The tried and true percentage is 25%, however, most lenders will expand that to 35%. With my 30 years in real estate I personally recommend a person keep their home payment as low as possible, around 25%. The amount you save in a lower payment is better used maximizing your funding for retirement plans.
During 2004 through 2007 lenders were allowing people to go as high as 65% indebtedness . That included all debts such as car loans, cc payments, student loans, etc. That madness led to the foreclosure mess we experienced in 2008-2011 where people could not afford their homes either through illness, loss of job or other bills taking a larger portion of take home pay.
When looking at your mortgage, don't forget your total debt payments you make each month. The total amount of debt payments should not exceed 35% of your income.
