Smart Financial Tips for Paying Off Your Home

Gina Piper August 20, 2025

Buying a home is such an exciting milestone, but it also comes with one of the biggest financial responsibilities most people will ever take on. Gina and her team at Elation know how important it is to feel confident while managing your mortgage. With a little planning and some smart strategies, you can stay on top of your payments and feel more secure about your financial future.

The 28/36 Rule Rule for Housing Costs

One of the simplest and most helpful guidelines is the 28/36 Rule .

• Try to keep no more than 28% of your gross monthly income for housing costs (mortgage, taxes, and insurance).

• Keep all debts combined, including housing, car loans, credit cards, and student loans, under 36% of your gross monthly income.

Example: If you earn $6,000 per month, aim to keep housing costs at or below $1,680, and total debts at or below $2,160.

Recommended Income Distribution

A version of the 50/30/20 rule works especially well for homeowners:

• 50% Needs such as mortgage, utilities, transportation, groceries

• 20% Savings and Investments such as retirement contributions, emergency fund, long-term planning

• 20% Debt Payments and Lifestyle such as credit cards, loans, leisure activities

• 10% Extra for additional mortgage payments or savings

This structure helps you stay current on expenses, grow your savings, and pay down your mortgage faster.

Build an Emergency Fund

Unexpected things happen, and it’s always best to be prepared. Financial experts recommend setting aside three to six months of necessary expenses in an emergency fund. That way, if life throws you a curveball like job changes, repairs, or medical bills, you’ll have peace of mind knowing your mortgage is still covered.

Stay Alert to Market Conditions

Budgeting is key, but so is timing. Keeping an eye on real estate trends and interest rates can save you a lot of money in the long run. Refinancing or buying when rates are lower could reduce your monthly payments and free up cash for other goals.

Income Required to Purchase a Home

Here’s a simple way to figure out the minimum income you’d need:

Monthly Income ≈ Estimated Monthly Housing Payment ÷ 0.28

Example: On a $500,000 home:

• With 20% down, the loan would be $400,000

• At 6.5% interest over 30 years, payments are about $2,528 (closer to $2,800 with taxes and insurance)

• Following the 28% rule, you’d need to earn about $10,000 a month ($120,000 a year) to afford it comfortably

Recommended Loan Terms

The most common options in the U.S. are:

• 30-Year Fixed Mortgage with lower monthly payments and more flexibility

• 15-Year Fixed Mortgage with higher payments but faster payoff and big savings on interest

• 20- or 25-Year Mortgages which are less common but a middle-ground option

Many homeowners choose a 30-year mortgage for flexibility but make extra payments when they can, which shortens the loan term and cuts down interest.

Final Thoughts

Owning a home isn’t just about getting the keys. It’s about having a plan that keeps your finances stable and your goals within reach. By following the 28/36 rule, keeping your budget balanced, watching the market, and choosing the right loan, you can set yourself up for long-term success.

Gina and her team at Elation are here to walk with you through every step of the journey, offering practical financial guidance and real estate advice to help you feel confident in your homeownership goals. Contact Us.