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  • Writer's pictureRebecca Richardson - Mortgage Consultant

How Much House Can I Afford?

When you're starting your home search, normally one of the first questions is how much house can I afford?

The answer that is pretty simple. It's what payment are you going to be able to comfortably afford to maintain your lifestyle, have a little bit of room in your budget, and basically just make sure that it's a really comfortable purchase for you. From a more technical standpoint, from a lending perspective, what we're looking at is what's called your debt to income ratio. What that is, is that is any other obligations that you already have like car payments, student loans, credit cards, things like that, plus the mortgage payment compared to your gross income before tax income.

As a general rule, most mortgage programs are going to have a maximum debt to income ratio from about 40 to 50%. For example, if your monthly income is $5,000, and the mortgage program that we're using allows up to 50% debt to income ratio, then that gives us 20 $500 to go towards the mortgage payment, other debts. That's where other debts can really come into play as far as how much house you can afford, or how much house you can get pre approved for.

That's going to be part of our conversation from the standpoint of not only what you are comfortable with, but also what fits into that debt to income calculation and ultimately, your loan approval.


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