Home Buying
The most common mistake homebuyers make isn't falling in love with a house they can't afford — it's not knowing what they can afford before they start looking. A lender's pre-approval tells you what the bank will lend. That's not the same as what you can comfortably live with.
Mortgage Affordability Calculator
Use the calculator to run the numbers for your specific situation.
Most lenders use the 28% front-end DTI rule as a qualifying threshold: your total housing costs (principal, interest, property taxes, and insurance — collectively called PITI) shouldn't exceed 28% of your gross monthly income. On a $80,000 annual salary, that's $1,867/month in total housing costs. On a $120,000 household income, it's $2,800/month. But 28% is a ceiling, not a target. Many financial planners recommend keeping housing costs at 25% or below — leaving room for retirement contributions, emergency savings, and the costs of homeownership that don't show up in a mortgage payment. Expenses that catch new homeowners off guard: property taxes vary enormously by location (0.5% to 2.5%+ annually), homeowner's insurance typically runs $800–2,000/year, HOA fees can add $200–600/month, and the "1% rule" suggests budgeting 1% of home value annually for maintenance and repairs.
Front-end DTI covers just housing. Back-end DTI includes all monthly debt payments — housing, car loans, student loans, credit cards, and any other installment debt. Most conventional lenders cap back-end DTI at 43%. FHA loans can go to 50% with compensating factors. But qualifying and comfortable are different thresholds. If you have $500/month in car payments and $300/month in student loans, that $800 comes directly off your housing budget. On an $80,000 salary, your effective maximum housing payment drops from $1,867 to $1,067. This is why paying down existing debt before applying for a mortgage — even if it seems counterintuitive — can meaningfully increase what you qualify for.
At a 7% interest rate on a 30-year fixed mortgage: $60,000/year → approximately $220,000–$240,000 home price (20% down) $80,000/year → approximately $290,000–$320,000 home price (20% down) $100,000/year → approximately $360,000–$400,000 home price (20% down) $150,000/year → approximately $540,000–$600,000 home price (20% down) These assume no other significant monthly debts. Every $100 in monthly debt reduces your buying power by roughly $12,000–15,000. These are maximum figures — not recommendations. Many financial advisors suggest buying at 3–4x annual income rather than the 5–6x that 28% DTI technically allows.
Twenty percent down avoids PMI (private mortgage insurance), which adds 0.5–1.5% of the loan amount annually to your payment. But 20% on a $350,000 home is $70,000 — a significant barrier. Options for buyers with less: FHA loans allow 3.5% down with a 580+ credit score, conventional loans allow 3–5% down with PMI, and some state and local programs offer first-time buyer assistance. Putting less down preserves cash for emergencies and other goals, but PMI adds real cost — and you're carrying a larger loan at interest. The mortgage calculator can model both scenarios with your exact numbers.
What you can afford is not simply a function of income. It depends on your other debts, your down payment, your local property tax rate, your financial risk tolerance, and what you want your life to look like after you buy. The mortgage affordability calculator can give you the numbers. The decision of how much of that ceiling to actually use is yours to make.
Run the numbers yourself
Find out how much house you can afford and calculate your monthly payment with full PITI breakdown.