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2 rules to consider when deciding how much mortgage you can afford, according to a financial planner

CNBC Select spoke with a financial planner about how to decide how much your mortgage should be.

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Whether you're a first time homebuyer or a seasoned real estate investor, buying a home involves a lot paperwork and patience. And if you want to ensure you're making the right financial decision, it's also important to do the math before your heart is set on a particular house.

When you get pre-approved for a mortgage, the lender will tell you how much loan you can qualify for. While your salary and credit score are obvious considerations, lenders look at your whole financial picture when deciding how much money to lend you.

At the same time, you should be taking a really close look at your budget to understand how much you can comfortably afford. Financial advisors have a few rules to follow, but it's also up to you to understand your comfort level when taking on debt.

CNBC Select spoke with Mark Reyes, CFP and Albert financial advice expert, about the two rules you should follow when taking out a mortgage — and when it might be OK to break them.

The annual salary rule

The ideal mortgage size should be no more than three times your annual salary, says Reyes.

So if you make $60,000 per year, you should think twice before taking out a mortgage that's more than $180,000. However, if you have a partner, and your combined income is $120,000, you can comfortably increase your loan amount to $360,000.

That's not to say you should always opt for the most expensive mortgage you can qualify for. If you settle on something below your max, you'll have more wiggle room to put money into a savings account or pay for other costs like home renovations.

The monthly income rule

If you want to focus your search even more, take the time to think about your monthly spending. While the Consumer Financial Protection Bureau (CFPB) reports that banks will qualify mortgage amounts that are up to 43% of a borrower's monthly income, you might not want to take on that much debt.

"You want to make sure that your monthly mortgage is no more than 28% of your gross monthly income," says Reyes.

So if you bring home $5,000 per month (before taxes), your monthly mortgage payment should be no more than $1,400.

"With a general budget, you want to have 50% of your income going toward utilities, mortgage and other essentials," says Reyes. Keeping your mortgage payment under 30% of your income ensures you have plenty of room for the rest of your needs.

These rules might not apply depending on where you live

The "three times your salary" rule and the "less than 30% of your monthly income" rule are both helpful guidelines. But the amount you feel comfortable spending on your mortgage payments could differ depending on where you live and your other financial goals.

You should also consider what the market is like where you live, says Reyes. The "three times your salary" rule might not be realistic for people who live in areas with high cost of living.

If it seems like you might need to take out a bigger mortgage to afford to buy a home, Reyes recommends that you make sure you're in good financial standing in other areas of your life. It's important to have a significant emergency savings set aside to make up for the fact that your budget will be stretched a little thin. You should also have ample retirement savings and a separate stash of cash to cover your move-in and closing costs.

But bigger mortgages are not always desirable, explains Reyes. If your mortgage represents too big of a chunk of your income, a lender might charge higher interest rates and other fees to compensate for the higher risk you could default.

Make yourself a competitive buyer

Don't spend all your time daydreaming about listings you find on Zillow. Do research to learn what kinds of mortgage loans are out there, including FHA, conventional, VA and USDA loan programs. (Here are four tips to help you qualify for a mortgage.) Get pre-approved by a lender before you start shopping, so you know your price range, and you'll be ready to make an offer on the spot if need be.

It's also important to know your credit score. Having a score of 760 or higher will qualify you for the best mortgage rates, so take a few months and build your credit if you can. And then do everything you can to keep it in good standing.

If you're not sure where your credit score currently stands, sign up for a free or paid credit monitoring service to check your score.

CreditWise® from Capital One is a free credit monitoring service that anyone — regardless of whether they are Capital One cardholder — can use. Receive an updated VantageScore credit score from TransUnion every week and credit report updates from TransUnion and Experian in real time. Use the credit score simulator to check the potential effect that certain actions, such as paying off debt or closing a credit card, may have on your credit score. In the months leading up to applying for your mortgage, you'll want to be extra careful about closing accounts and racking up debt, as it can decrease your score and make your mortgage more expensive.

CreditWise® from Capital One

CreditWise® from Capital One
Information about CreditWise has been collected independently by CNBC and has not been reviewed or provided by the company prior to publication.
  • Cost

    Free

  • Credit bureaus monitored

    TransUnion and Experian

  • Credit scoring model used

    VantageScore

  • Dark web scan

    Yes

  • Identity insurance

    No

See our methodology, terms apply.

PrivacyGuard™, one of CNBC Select's top choices for best credit monitoring services, offers well-rounded coverage, including alerts from all three credit bureaus whenever there's new information as well as monthly credit score and report updates, depending on the plan you choose.

PrivacyGuard

PrivacyGuard
Information about the PrivacyGuard® plans have been collected independently by CNBC and has not been reviewed or provided by the company prior to publication.
  • Cost

    $9.99 to $24.99 per month

  • Credit bureaus monitored

    Experian, Equifax and TransUnion

  • Credit scoring model used

    VantageScore

  • Dark web scan

    Yes, for Identity and Total Protection plans

  • Identity insurance

    Yes, up to $1 million for Identity and Total Protection plans

See our methodology, terms apply.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.