Skip to main content

«  View All Posts

Home Buying

How Much House Can I Afford?

October 12th, 2022 | 8 min. read

How Much House Can I Afford?

Print/Save as PDF

When you're considering buying a house, one of the first questions you might ask is "How much house can I afford?" This is a valid question and there are many factors to consider when trying to determine this!


If you're crunching the numbers yourself and you've included your current total monthly debt payments + the salary you bring home month to monththen you're on the right track. But there's more that you have to consider like upfront costs, closing costs, and ongoing costs.  


Here, we'll cover rules and best tips if you want to buy a house but aren't sure you can afford it. I would hate for you to jump into buying a home and find yourself house poor Where most of your paycheck goes to your home leaving little to no room to cover other expenses. . So, if you're ready to paint a realistic picture of how much house you can afford - keep reading!

Psst... I'll also provide our mortgage calculator so it'll be easier to determine the figures yourself.   


take a quick look at what we'll cover

Home-Loans-Iconhow much house can i afford?


This is a question that many people ask themselves when they are considering buying a house. There are several factors that go into determining the answer to this question, and the amount of house you can afford will ultimately depend on your personal financial situation. That being said, there are a few general guidelines that can help you to get an idea of how much you may be able to afford. Here's where you can start:

  • Calculate your take-home pay: This is the total amount of money you earn each month before taxes and other deductions are taken out.
  • Estimate your monthly expenses: Once you have your gross monthly income, you'll need to estimate your monthly expenses. This includes things like your mortgage payment, insurance, food, utilities, and any other regular bills that you have.
  • Determine your cash flow: After subtracting your monthly expenses from your gross monthly income, you will be left with your monthly cash flow. This will give you an idea of how much money you have left over each month after all of your bills are paid.
From there, you can begin to look at houses in your price range and get a better idea of what you can afford. Keep in mind that the amount you can afford may change as your financial situation changes, so it's important to reassess on a regular basis.

If you like, give our mortgage payment calculator a whirl.

Mortgage Payment Calculator


what determines how much house i can afford?


your current income and debts

your credit score

the type of loan you're considering

the down payment you're able to make

your monthly expenses

All these things will come into play when a lender is trying to determine how much they are willing to lend you. They'll also be used to calculate your debt-to-income ratio (DTI). 


Money-bag-percent-iconwhat is a debt-to-income ratio (dti)?  

When lenders review your debt, they'll review your debt-to-income ratio (DTI).  It measures how much of your monthly income is spent on debts (such as car payments, credit card bills, etc.)

To calculate your DTI, simply divide your monthly debt obligations by your monthly income. For example, if you earn $3,000 per month and have monthly debt obligations of $900, your DTI would be 30%. Generally speaking, a higher DTI may make it more difficult to qualify for a mortgage or to get the best mortgage terms.

Plus, a high DTI can make it more difficult to qualify for a mortgage and may result in a higher interest rate. However, there are ways to lower your DTI, such as paying down current debts or increasing your income. 

To help lenders determine your financial status, they use the front-end and back-end DTI.  Psst... this is where the 28%/36% rule comes into play. 

QUICK TIP: Knowing your DTI is an important part of the mortgage process and can help you get the best possible deal on your home loan. 


what's the 28%/36% rule?

The front-end DTI is calculated as housing expenses which include principal, interest, taxes, and insurance. This is divided by your gross income. And the Back end DTI  calculates your other debts and loan payments. 

Lenders usually prefer borrowers to have a 28% front-end DTI and prefer borrowers to not exceed 36% on the back-end DTI. 

28% of your gross monthly income should go towards your housing expenses which include principal, interest, taxes, and insurance. And 36% should go towards the rest of your other debts and loan payments.  

If you have funds left over it could be placed in savings or reserved for other expenses like groceries, home décor, dining out, travel, etc. It's up to you! Psst... If you're planning to buy a home, I suggest saving any extra funds you have. It may come in handy if an emergency occurs. You might need it to make a down payment or need to cover other expenses. 


QUICK TIP: There are programs available for borrowers with high DTIs. So, if you're concerned about your DTI levels, our Mortgage Loan Officers are here for you. You can send an email, give us a call at 704.375.0183 x 1525, or visit any of our branches.


Tools-Iconhow can i improve my home affordability?

If a house is unaffordable, there are things you can take to improve your chances of affording a house down the line. These steps include:

  • Improve your credit score: An important step to increasing your credit score is knowing what's on your credit report. By law, consumers can check their credit reports for free once a year. 
    Learn More About Credit Scores
  • Minimize debt elsewhere: Minimizing debt or keeping your debt balances low could also help increase your credit score. But minimizing debt can make it possible to afford a home.
  • Make a bigger down payment: A bigger down payment can help by decreasing the amount of money you need to finance.
  • Increase your savings: In the article "How Do I Start Saving for My Goals?" I talk about cutting your spending and start saving which I know is easier said than done, but you're not alone here. There are ways you can lower a phone bill, car insurance, cable bills, and more. Click below for some helpful tips. 
    Start Saving for Your Goals
  • Increase your income: I know this is easier said than done, but there are a few ways to increase your income. One way is to get a higher-paying job. Another way is to make additional streams of income. For example, you could start freelancing or pick up a side hustle.
  • Look for a more affordable home: If you're having trouble finding a home within your budget, it might be time to look for a more affordable option.


ready to receive some real numbers?

Our Mortgage Loan Officers can help! You can send an email, give us a call at 704.375.0183 x 1525, or visit any of our branches.



As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.

learning & guidance

more resources for your home buying journey

How Do I Choose the Best Mortgage Product for Me?

Unsure of which mortgage product is best for you? Here's a breakdown of each type of mortgage, so you can make the best decision for your unique situation.

6 min. read

What Do I Need to Qualify for a Mortgage?

Since there's more than one mortgage product it's understandable to ask what you'll need to qualify. Here we'll break down the DTI, credit score, and more.

3 min. read

Join our Mailing List & get articles sent straight to your inbox