How Much House Can I Afford?

Buying a home is exciting, but "house poor" is a stressful reality to avoid. Let's calculate exactly what fits your budget.

Check Your Buying Power

Enter your income and debts to find your maximum home price.

Use Mortgage Calculator

The Key Metric: Debt-to-Income (DTI) Ratio

Lenders look closely at your DTI. This is the percentage of your gross monthly income that goes toward paying debts. Most lenders want your total DTI (including the new mortgage) to be under 43%. Ideally, you want it under 36%.

Case Study: $50,000 Salary

  • Gross Annual Income: $50,000
  • Gross Monthly Income: ~$4,166
  • Max Housing Payment (28%): $1,166
  • Max Total Debt (36%): $1,500

If you have $400 in car and student loan payments, your max housing budget drops to $1,100 ($1,500 - $400).

Don't Forget Taxes and Insurance

Your monthly payment isn't just principal and interest (P&I). It's PTI (Principal, Interest, Taxes, Insurance). Taxes can add $200-$500/month alone. Use the Tax Calculator to estimate property tax impact.

The Down Payment Factor

Putting 20% down avoids Private Mortgage Insurance (PMI), which saves you $100-$300/month. If you only put 3.5% down (FHA loan), your buying power decreases because your monthly PMI payment eats into your affordability.

Closing Costs

Remember to save an extra 2-5% of the purchase price for closing costs. You can't use these funds for the down payment.

Home Affordability FAQs

The 28/36 rule states that your household expenses (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income, and your total debt payments (including car loans, student loans, credit cards) should not exceed 36% of your gross income.