You fell in love with your perfect home, and your bank pre-approved you for a mortgage, but before you sign on the dotted line you want to make sure your eyes aren’t bigger than your bank account.

Lenders look at how much they think you can pay them each month, but that doesn’t mean you can make those payments and still save for retirement, college for the kids and still manage to go on a vacation every year.

Deciding how much mortgage you can afford is personal but many financial experts say a good rule of thumb is to cap your housing costs at 25 to 30 per cent of your take home pay. That way you can still have a little wiggle room to keep up with anything that breaks down.

“You need to have money in case you need to replace the roof. Owning a home is very cost intensive so keeping your mortgage payments as low as possible will help you afford everything else that goes with it,” said Lauren Lyons Cole, Consumer Reports money editor.

If you’re having trouble calculating a number you can live with you can work with a financial advisor. Or you can do your own calculations through the Ratehub online mortgage calculator.

Working out your mortgage affordability is important, especially since a recent survey by Manulife found three quarters of homeowners wouldn’t be able to afford even a 10 per cent hike in their mortgage payments. And for some borrowers that equates to just a one per cent increase in interest rates.