How Much House Can I Afford?

What your income supports, and what your cash can actually close on

$

Before tax, all borrowers combined.

$/mo

Minimum payments on cards, cars, and student loans. Not rent, groceries or utilities.

$

Everything you can bring to the table. This has to cover closing costs as well as the down payment.

%

Checking today’s rate…

$/mo
Loan ProgramConventional looks best
Income is your limit$5,125/mo ceiling

45% of $12,500 less $500 of debt. Clearing that debt buys $61,000 more house.

At 740 and 90% LTV, conventional PMI runs 0.29% against FHA’s flat 0.55% — and PMI comes off at 20% equity, where FHA’s mostly doesn’t. Price it in the PMI calculator.

You can afford

$684,500

at $5,124/mo all in, 9.6% down

Loan

$618,946

Down

$65,554

Back-end DTI

45%

Monthly income

$12,500

before tax

Debt load

$500

4% of income

Cash available

$80,000

down + closing

How far do you want to stretch?

45% · Tight

Conservative

<36

Tight

36–45

Aggressive

45–50

Routinely approved. Workable, but little slack if income dips.

The track stops at 50% because that’s where Conventional underwriting stops. FHA is the only program that goes further — to 57% back-end and 47% front-end — so switch the program to open the rest of it up.

Monthly payment$5,124/mo
Principal & interest$3,811
Property taxes$964
Homeowners insurance$200
Mortgage insurance (PMI)$150

Moves with the rate. 6.25% is today's Zillow average for TX, not a quote on your file — get a real one.

Cash to close$79,884
Down payment$65,554
Closing costs & prepaids$14,330
Left over$116

Same engine as the Closing Cost calculator — promulgated title rates where the state sets them. This is the part that moves with price and loan size; go there for the full itemized Closing Disclosure.

Taxes, insurance and closing costs vary by property, and underwriting looks at more than DTI. Today’s rates →

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What "Affordable" Actually Means to a Lender

Two separate tests have to pass, and most calculators only run one of them. The first is debt-to-income: can your monthly income carry the payment. The second is cash: can you actually get to the closing table. Plenty of people qualify for a house they can't close on, and the number that matters is the smaller of the two.

Front-end vs back-end DTI

Front-end is the housing payment alone against your income. Back-end adds every other monthly debt — car, cards, student loans. Lenders test both and the tighter one wins. FHA's limits are 47% front and 57% back, so with no debts the front-end binds, and the moment your debts pass about 10% of income the back-end takes over.

Paying down debt buys more than saving

If income is your binding limit, every $100/month of debt you clear frees $100/month of housing payment — on your numbers that's about $12,200 of purchase price per $100/month cleared. That's usually a better return than putting the same money toward the down payment, and it's why clearing a car loan before applying is such common advice. It does nothing at all if cash is your binding limit, which is the other reason to know which one you're up against.

Closing costs come out of the same pile

A calculator that asks for "down payment %" is quietly assuming closing costs are free. They aren't — lender fees, title, recording and prepaid taxes and insurance routinely run several percent of the price, and they come out of the same savings account. That's why this one asks what cash you have rather than what percentage you plan to put down.

The maximum is not the target

This solves for the most house you can get, which means it spends every dollar of your cash and usually carries mortgage insurance. That's the ceiling, not a recommendation. Sitting a band or two lower on the slider leaves room for the repairs, furniture and emergencies that arrive in the first year of ownership.

Where the payment goes beyond principal

Taxes and insurance are part of the DTI test, and they vary enormously by state — Texas runs about 1.69% of value a year against roughly 0.73% in California. On a $500,000 house that difference is nearly $400 a month, which is real purchasing power before you have looked at a single listing.

What this doesn't model

Residual income, which is the test that actually governs VA loans. Non-occupant co-borrowers. Asset depletion income for retirees. Rental income offsets. Any of these can move the answer materially, and all of them need a conversation rather than a calculator.

How Much House Can I Afford on My Salary?

There’s no single multiplier, but there is a reliable way to reason about it.

Lenders don’t work from salary; they work from monthly gross income against monthly obligations. Take your gross monthly income, multiply by the back-end DTI limit for your loan type — roughly 45% conventional, up to 57% FHA — and subtract every other monthly debt payment. What’s left is what’s available for housing, and that has to cover principal, interest, property taxes, insurance, mortgage insurance and any HOA, not just the mortgage.

Two things move the answer more than income does. Property taxes, which run about 1.69% of value annually in Texas against roughly 0.73% in California — nearly $400 a month apart on a $500,000 house, before you’ve looked at a listing. And existing debt, because every $100 a month you clear frees the same $100 for housing, which is worth roughly $12,200 of purchase price at current rates.

The old “2.5× your salary” and “28/36” rules were built for a different rate environment. Use the calculator, not the rule.

What Lenders Look At Besides Income

Income and cash are the two binding tests, but four other things move the answer.

Credit score sets your rate, and the rate sets your payment, which feeds straight back into DTI. Each 20-point band can move the rate meaningfully, which is why improving a score before applying often buys more house than saving another few thousand.

Employment history — generally two years in the same field, though gaps and changes are explainable. Self-employment is underwritten from two years of returns, which is exactly why bank statement loans exist.

Reserves — months of payments left after closing. Not always required on a primary residence, always relevant on investment property, and a compensating factor that can push a marginal file through.

Property type. Condos face additional project-level review, and a warrantability problem in the building can kill a loan that was fine on your numbers alone.

Prequalification vs preapproval

Prequalification is an estimate based on what you tell a lender. Preapproval means a lender has reviewed documentation and issued a conditional commitment, which is what a seller wants to see with an offer.

Both typically start with a soft credit pull. A hard pull applies when the file moves into underwritten preapproval — and multiple mortgage inquiries inside a short shopping window are generally treated as a single event by scoring models, so rate shopping doesn’t compound the damage.

Frequently asked questions

How much house can I afford on a $100,000 salary?

It depends far more on your existing debts, your down payment, and your state’s property taxes than on the salary itself. As a frame, roughly 45% of gross monthly income is the conventional back-end DTI ceiling, minus every other monthly debt payment — and the remainder has to cover taxes, insurance and mortgage insurance, not just principal and interest.

What is the 28/36 rule?

It’s a guideline that housing costs stay under 28% of gross monthly income and total debt under 36%. Modern underwriting is more permissive — conventional loans commonly allow 45% back-end and FHA up to 57% — so 28/36 is better understood as a conservative comfort target than as the qualification bar.

How much do I need to make to afford a $500,000 house?

The honest answer is a range, because property taxes, insurance, your rate and your existing debts all move it substantially. The calculator above solves it from your actual numbers rather than a national average, and the state you’re buying in is often worth more than a $20,000 difference in salary.

Does the lender’s maximum mean I should borrow that much?

No. The maximum spends every dollar of your cash and usually carries mortgage insurance — it’s a ceiling, not a recommendation. Sitting a band or two below leaves room for the repairs, furniture and emergencies that arrive in the first year of ownership.

Should I pay off debt or save for a down payment?

If income is your binding constraint, clearing debt wins — every $100 a month of payments you eliminate frees the same $100 for housing, worth roughly $12,200 of purchase price. If cash to close is your binding constraint, saving wins. The calculator shows which one is binding for you, which is the question most people skip.

How much house can I afford with bad credit?

Less, and for two reasons that compound: a lower score means a higher rate, which raises the payment and eats into your DTI, and it means more expensive mortgage insurance. FHA is generally more forgiving below 680, while conventional pricing improves sharply above 700.

What’s the difference between prequalified and preapproved?

Prequalification is an estimate from what you tell the lender; preapproval means documentation has been reviewed and a conditional commitment issued. Sellers take preapproval seriously and largely discount prequalification, so get preapproved before you make offers.

Which Loan Type Is Right for You?

A quick guide to help you choose

Choosing between Conventional, FHA, and VA loans depends on your unique situation. Here's a quick framework:

Choose Conventional if...

You have 10-20%+ down payment, credit score above 700, and want to avoid permanent mortgage insurance. Best rates and most flexibility.

Choose FHA if...

You're a first-time buyer with limited savings (3.5% down), credit below 700, or higher debt-to-income ratio. More flexible qualification but permanent MIP.

Choose VA if...

You're a veteran, active-duty military, or eligible surviving spouse. Best rates, 0% down, no monthly mortgage insurance.

Understanding Front-End vs Back-End DTI

Why lenders care about both ratios

Debt-to-income (DTI) ratio is how lenders determine if you can afford a mortgage. There are two types:

Front-End DTI (Housing Ratio)

Your housing costs (PITI) divided by gross monthly income.

Target: 28% for Conventional, 31% for FHA

Back-End DTI (Total Debt Ratio)

All monthly debts (housing + car + student loans + credit cards) divided by gross monthly income.

Target: 43% standard, up to 50% with compensating factors

How to improve your DTI: Pay down credit cards, avoid new car loans before buying a home, and consider a longer loan term to reduce monthly payment.

Conventional vs FHA vs VA: Pros & Cons

A detailed comparison

ConventionalFHAVA
Best ForStrong credit, 10%+ downFirst-timers, lower creditVeterans, active military
Min Down3% (20% to avoid PMI)3.5%0%
Min Credit620580 (500 with 10% down)620 (lender minimum)
MI CostPMI: 0.14-1.65% (varies)1.75% upfront + 0.55%/yrFunding fee only (no monthly)
MI Cancellable?Yes, at 80% LTVNo (life of loan if <10% down)N/A

PMI vs MIP: What's the Difference?

Understanding mortgage insurance costs

PMI (Private Mortgage Insurance)

Required on conventional loans when down payment is less than 20%. Key features:

  • • Rate varies by credit score and LTV (0.14% to 1.65%)
  • • Can be paid monthly, upfront, or split
  • • Cancellable when you reach 80% LTV
  • • Better credit = significantly lower rates

MIP (Mortgage Insurance Premium)

Required on all FHA loans regardless of down payment. Key features:

  • • Upfront: 1.75% of loan amount (financed into loan)
  • • Annual: 0.55% for loans over 15 years
  • • Not cancellable if you put less than 10% down
  • • Same rate regardless of credit score

Bottom line: If you have good credit (720+) and can put 10-15% down, conventional with PMI often costs less than FHA with MIP over the life of the loan.

How to Get the Best Rate

Tips to save thousands over your loan term

1

Improve your credit score before applying

Each 20-point increase can save 0.25% on your rate. Pay down credit cards, don't close old accounts, and avoid new credit applications.

2

Save for a larger down payment

20% down eliminates PMI entirely. Even 10% vs 5% can significantly reduce your insurance costs.

3

Compare multiple lenders

Rates vary significantly between lenders. Get at least 3 quotes on the same day to compare apples-to-apples.

4

Consider buying points

Paying 1% upfront (one "point") typically lowers your rate by 0.25%. Worth it if you'll stay 5+ years.

5

Lock at the right time

Rates change daily. Lock when you're comfortable with the rate—don't try to time the market perfectly.

Ready to Get Pre-Approved?

Take the next step toward homeownership

Getting pre-approved shows sellers you're serious and helps you understand exactly how much you can borrow. Our lending partners offer:

  • ✓Free pre-approval with no obligation
  • ✓Competitive rates from multiple lenders
  • ✓Quick online application (under 10 minutes)
  • ✓Conventional, FHA, and VA options available
Start Your Pre-Approval

Documents you'll need: Recent pay stubs, W-2s or tax returns, bank statements, and government ID.