How much house can you afford? It comes down to income, debts, and your down payment — let’s find your number!
How Much House Can You Afford?
Understanding Your Real Buying Power
Knowing how much house you can afford is the essential first step in your homebuying journey. Whether you’re a first-time buyer or returning to the market, understanding your financial picture helps you avoid overextending your budget and prepares you for success.
Three numbers shape your home affordability:
Your income Your monthly debts Your savings for a down payment
Let’s break down what each one means and how to use it to calculate your comfort zone.
Your Income: The Foundation of Affordability
Your monthly or annual income forms the baseline for what you can afford. Most lenders use something called a debt-to-income (DTI) ratio, which compares your gross income to your monthly debts. The lower the ratio, the more you can safely borrow.
A general rule of thumb? You should aim to spend no more than 28-30% of your gross income on housing expenses.
Your Monthly Debts: The Hidden Factor
Credit card payments, auto loans, student loans, and personal loans — these monthly debts reduce the amount you can safely put toward a mortgage. Lenders usually want your total DTI ratio under 43%, including all your debts and new mortgage payment.
Want to increase how much home you can afford? Paying down existing debts is a great first step.
Your Down Payment: The Game Changer
The size of your down payment impacts your monthly mortgage and the loan programs available to you. While 20% down is ideal, many loans allow as little as 3% down with strong credit.
Here’s what a larger down payment helps you do:
Lower your monthly payment Avoid private mortgage insurance (PMI) Qualify for better interest rates
Need help planning your down payment strategy? Let’s talk about loan options that fit your goals.
Let’s Run the Numbers Together
Buying a home doesn’t have to feel overwhelming. By reviewing your income, debt, and savings, I can help you determine a price range that feels good and keeps your future bright. Whether you’re dreaming big or starting small, the first step is knowing your numbers.
Want a quick estimate? Try NerdWallet’s Affordability Calculator
Internal Link Suggestions:
Ultimate Guide to Buying Your First Home
Outbound Link Suggestions:
NerdWallet’s Home Affordability Calculator HUD’s Guide for Homebuyers
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