How Much House Can You Afford?
Income, debts, down payment, and the full PITI payment all decide your real budget. Here's how lenders — and you — should do the math.
Last updated: 2026-07-20
The price a lender approves and the price you can comfortably live with are often two different numbers. Working out how much house you can afford means starting from your income and debts, not from a home you've fallen in love with.
Start with debt-to-income
Lenders cap your total monthly debt — including the new mortgage — at a share of your gross income, typically around 36% (and rarely above 43%). Subtract your existing debt payments from that cap and what's left is your housing budget.
Don't forget taxes and insurance
That housing budget has to cover the full PITI payment, not just principal and interest. Property taxes, homeowners insurance, and any PMI or HOA dues eat into it first. Ignoring them can overstate your budget by tens of thousands of dollars in home price.
The down payment lever
- A larger down payment raises the home price you can reach and can remove PMI.
- 20% down is the classic threshold that avoids PMI and unlocks better rates.
- But draining your savings for a bigger down payment can leave you without an emergency fund — balance the two.
Run your own numbers with the affordability and DTI calculators below before you start shopping.