How Much House Can I Afford?

How lenders decide

Underwriting centers on debt-to-income ratio. The front-end ratio compares your total housing payment to gross income; the back-end ratio compares all monthly debt obligations to gross income. Conventional loans often allow back-end ratios up to about 43%, with exceptions higher.

Credit score, cash reserves, employment stability, and the down payment all shift the outcome, but DTI sets the ceiling.

What the payment actually contains

Lenders count principal, interest, property taxes, homeowners insurance, HOA dues, and mortgage insurance in the housing payment. Maintenance and utilities are not in the calculation — but they are in your life.

Approved vs. affordable

The maximum a lender approves is a risk threshold, not a recommendation. Many buyers deliberately purchase well below their approval amount to preserve savings, retirement contributions, and flexibility.

A practical test: model the total monthly cost of ownership, subtract it from take-home pay, and check whether the remainder still funds everything else you care about.

Keep reading

• How Much Money Do I Need to Buy a Home?

  Cash to close, reserves, and the costs that arrive right after closing.

• What Is PMI?

  Private mortgage insurance: who pays it, how much it costs, and how to remove it.