How Much House Can You Afford?

Buying a home is one of the biggest financial decisions you’ll make. Understanding how much house you can afford helps you avoid stretching your budget too thin.

Start with your income

Many lenders use income-based guidelines to determine affordability. Your gross monthly income helps set limits on how much you can borrow.

Debt-to-income ratio (DTI)

Your debt-to-income ratio compares your monthly debt payments to your income. Lower DTI ratios generally make it easier to qualify for a mortgage and keep payments manageable.

Down payment size

A larger down payment reduces the amount you need to borrow and may lower your monthly payment. Smaller down payments can increase costs or require mortgage insurance.

Monthly payment comfort

Just because you qualify for a certain loan amount doesn’t mean you should borrow the maximum. Choosing a payment that fits comfortably within your budget provides flexibility.

Don’t forget other housing costs

Property taxes, homeowners insurance, maintenance, and utilities add to the true cost of homeownership. These expenses should be included when planning your budget.

Balance affordability and lifestyle

The goal is to buy a home that meets your needs without limiting your ability to save, invest, or handle unexpected expenses.