One of the biggest questions I get from homebuyers (especially first-timers) is:

“How much house can I actually afford?”

It’s a great question — and the good news is, we can figure that out pretty quickly once we break it down. Don’t worry, you don’t need to be a math whiz. I’ll walk you through it.

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It’s Not Just About Income

Most people assume it’s all about how much you make. Income is definitely part of the equation, but lenders also look at a few more key pieces:

• Your monthly income (before taxes)
• Your debts (credit cards, car loans, student loans, etc.)
• Your down payment amount
• The current interest rate
• Property taxes, homeowners insurance, HOA dues (if applicable)

All of these pieces help us figure out your Debt-to-Income ratio (DTI), which is a fancy way of saying: how much of your monthly income is already committed to other payments.

How Lenders Calculate It

Let’s use an example to calculate your housing affordability.

• Monthly gross income (before taxes): $8,000
• Monthly debts (car loan, student loan, credit cards, etc.): $750 total
• Estimated property taxes and homeowners insurance: $500 per month
• HOA dues (if applicable): $100 per month

Fannie Mae generally looks at two ratios:

Front-End Ratio (Housing-Only DTI):
They prefer your total housing payment — which includes principal, interest, taxes, insurance (PITI), and HOA — to stay at or below 28% of your gross income.
In this example:
28% of $8,000 = $2,240 max target for just your housing payment.

Back-End Ratio (Total DTI):
This includes your housing payment plus all your other debts. Fannie Mae will typically allow up to 45% DTI for most borrowers, and sometimes up to 50% for strong borrowers with compensating factors (excellent credit, strong reserves, large down payment, etc.).
For example:
45% of $8,000 = $3,600 max total for housing plus debts.
Subtract your $750 in existing debts: $3,600 – $750 = $2,850 available for housing.

So in this case, while the front-end ratio would suggest a housing budget of $2,240, the back-end ratio allows up to $2,850 depending on your full financial profile.

This is why it’s so important to review your full income, debt, credit, and assets to get a clear number for your situation.

Once we have your target housing payment, we can estimate your price range based on current mortgage rates and down payment options.

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Helpful Tools

I have great software that does this in real time, but if you’re playing around at home:

• Use a mortgage affordability calculator online. Keep in mind, though, not all calculators include taxes, insurance, or HOA dues accurately.
• Better yet, let’s run some real numbers together based on your full financial picture. You’ll get a much more accurate estimate than any online guesswork.

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The Bottom Line: Everyone’s “affordable” is different

Two people with the same income might qualify for very different home prices depending on debt, credit, and other factors. Just because you can qualify for a certain amount doesn’t always mean you should borrow that much. We’ll talk through what’s truly comfortable for your budget and long-term goals.

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Ready to find out your buying power?

The best way to know exactly how much house you can afford is to get pre-approved. It’s quick, painless, and gives you real answers — not estimates.

Click here to start your pre-approval today
Or call 214.945.1066 and let’s schedule a no-pressure consultation and run the numbers together