How Much Home Can You Afford? A Quick Guide for Today's Market

Kathleen Halbing
Apr 28
3 min read

When it comes to buying a home, one of the first (and most important!) questions to ask is: How much can I afford? As a mortgage loan officer, I've helped hundreds of families answer that very question — and I'm here to help you too.

Let's break it down into simple terms so you can start your homebuying journey with confidence.

Understanding Affordability: It's All About Balance

Affordability isn't just about what a lender says you qualify for. It's about finding a monthly payment that fits comfortably into your lifestyle. A smart mortgage payment should leave you room for savings, hobbies, vacations, and everyday living — not just bills!

When setting your budget, think about your full financial picture. Consider your day-to-day expenses, future goals, and unexpected costs that may pop up. Buying a home is exciting, but you want to make sure it adds to your life — not stresses it!

The Key Factor: Your Debt-to-Income Ratio (DTI)

One of the main tools lenders use to determine how much you can afford is your Debt-to-Income Ratio (often called DTI).

Here's the simple version:

Debt = Monthly payments you owe (credit cards, car loans, student loans, etc.)
Income = Your gross (pre-tax) monthly income

To calculate your DTI, divide your total monthly debts by your gross monthly income. Lenders typically look for a DTI below 43%, although some loan programs allow for higher or lower depending on the situation.

Example:

Total monthly debts (including proposed mortgage) = $2,000
Gross monthly income = $6,000
$2,000 ÷ $6,000 = 33% DTI

Keeping your DTI at a manageable level not only helps you qualify for a loan but also ensures you can comfortably manage your new mortgage alongside your other financial responsibilities.

Other Factors That Shape What You Can Afford

In addition to your DTI, lenders (and smart homebuyers!) also consider:

Down Payment: A larger down payment can lower your monthly payment and may eliminate the need for mortgage insurance.
Credit Score: Higher credit scores can lead to lower interest rates, which means lower monthly payments.
Loan Type: FHA, VA, USDA, and conventional loans each have different requirements and benefits. Choosing the right loan type can make a big difference in affordability.
Property Taxes & Insurance: These costs vary widely depending on the location and type of home you buy. They are an important part of your total monthly payment.

Don't forget about Homeowners Association (HOA) fees if you're buying a condo or a home in a community with shared amenities. These fees can significantly impact your monthly budget.

Hidden Costs to Keep in Mind

Beyond your monthly mortgage payment, there are other costs involved in homeownership that are important to plan for:

Home Maintenance and Repairs: Budget 1% of your home's value each year for maintenance.
Utilities: Heating, cooling, water, and electricity costs can vary based on home size and location.
Moving Expenses: From hiring movers to setting up new services, moving costs can add up quickly.
Furniture and Upgrades: You may want to invest in new furniture or home improvements after you move in.

Factoring these costs into your budget ensures you're truly ready for the full cost of homeownership.

Start with a Pre-Approval

The best way to know what you can afford is to get a professional pre-approval. I'll review your full financial picture, recommend the best loan options for you, and help you build a homebuying budget that feels right — not rushed.

A pre-approval also shows sellers that you're a serious buyer, which can give you a big advantage in a competitive market.

Remember: Just because you qualify for a certain amount doesn't mean you have to spend it all. I’m here to help you make a smart, sustainable decision that you feel good about both today and in the future.

Let's Find Your Comfort Zone

If you're ready to take the first step toward homeownership — or even if you're just starting to explore — I'm here to help you navigate the numbers with clarity and care. Reach out anytime for a personalized affordability review!