How much house can I afford? (DTI, down payment & comfort range)
Two guardrails set your price range: your budget comfort and your lender’s DTI cap. We’ll translate a monthly budget into a target price and show how taxes, insurance, HOA, PMI, and down payment change the number.
Start with a monthly budget
Pick a comfortable monthly housing cost (P&I, taxes, insurance, HOA, and PMI/MIP if applicable). A common comfort target is 25–33% of gross income, but your real number depends on other goals.
DTI cap vs comfort budget
Your lender uses DTI (debt-to-income) caps to set the maximum allowed payment. Your true purchase budget is the lower of (1) the amount that fits your comfort budget and (2) the amount that fits program DTI limits.
- Front-end (housing) and back-end (total) DTI both matter. See DTI explained.
- Compensating factors (bigger down payment, reserves) can boost approval flexibility.
If your comfort target is lower than what underwriting would allow, use your number. The goal is a mortgage you’ll enjoy living with.
Down payment & PMI effects
Down payment moves two levers
- Reduces the loan amount (lowers P&I)
- May lower or remove PMI sooner (Conventional)
At 20% down, conventional loans typically drop PMI. Lower down payments can still work—just budget for monthly MI.
Optimize, don’t over-stretch
- Keep some reserves (months of PITI) after closing
- Don’t drain every dollar for 20% if it stresses cash flow
- Model both paths in the calculator and pick the calmer plan
Track your savings plan with the Down-payment saving plan (Sheet).
Taxes, insurance & HOA
- Property taxes vary by county and exemptions—big impact on affordability.
- Homeowners insurance depends on coverage, location, and claims history.
- HOA/condo dues count in DTI; some buildings add assessments.
Use the Payment Calculator’s Taxes/Insurance/HOA fields to dial in local reality before making an offer.
Quick examples
Example A: Budget-led
Comfort budget: $2,600/mo. Taxes/Ins/HOA: $650. Leaves $1,950 for P&I.
At ~30-year fixed and current rates, that supports roughly a $X loan (see calculator) — adjust until the P&I fits $1,950.
Example B: DTI-capped
Gross income: $9,000/mo. Back-end cap target: ~45% → total debts ≤ $4,050.
Existing debts: $700 → max housing ≈ $3,350 (PITIA). Model price so PITIA ≤ $3,350.
Small rate moves change the price you can support. Re-run scenarios when rates shift or you change down payment.
Cash to close (closing costs & reserves)
- Closing costs are separate from your down payment (think lender, title, escrow, taxes/insurance prepaids).
- Ask for seller credits or lender credits if you need cash relief—see our seller credit template.
- Use the Closing Costs Calculator and tracker sheet to stay organized.
Next steps
- Set a starting price range in the Affordability Calculator.
- Pressure-test the monthly using the Payment Calculator.
- Review DTI explained and minimum scores by loan type.
- Download the pre-approval docs checklist (PDF) and get lender-ready.
Disclaimer: Educational info, not financial or legal advice. Program rules and lender overlays vary by investor and state.