Question 1

How much house can I afford?

Accepted Answer

Most lenders use a debt-to-income (DTI) ratio of 43% or less, meaning total monthly debts (including the new mortgage) should not exceed 43% of your gross monthly income. This calculator back-solves from that rule to show the home price you likely qualify for. Conservative estimates use 36% DTI for a safer affordability cushion.

Question 2

What is debt-to-income (DTI) ratio?

Accepted Answer

DTI is the percentage of your gross monthly income that goes toward debt payments. Lenders look at two numbers: front-end DTI (housing only) and back-end DTI (all debts including housing). Conventional loans typically cap back-end DTI at 43-50%, depending on program and compensating factors.

Question 3

Does this include PMI or mortgage insurance?

Accepted Answer

This calculator does not factor in private mortgage insurance (PMI), which typically applies when your down payment is less than 20%. PMI usually adds 0.3% to 1.5% of the loan amount annually. For an accurate affordability picture including PMI, work with a loan officer who can run your specific scenario.

Question 4

Should I buy at the top of my budget?

Accepted Answer

Generally, no. Qualifying for a certain payment doesn't mean it's the right payment for your lifestyle, savings goals, or unexpected expenses. Most financial advisors recommend targeting the 28% front-end DTI guideline and preserving margin for maintenance, emergencies, and investing.

Question 5

How do monthly debts affect what I can afford?

Accepted Answer

Every $100 in monthly debt reduces your maximum mortgage payment by roughly $100, and over a 30-year loan, that can reduce your buying power by $15,000 to $20,000 in home price. Paying down credit cards and car loans before applying can meaningfully increase affordability.

Question 6

Can down payment assistance help me afford more?

Accepted Answer

Yes. Down payment assistance (DPA) programs reduce the cash you need to close, freeing up reserves and sometimes allowing a more favorable loan structure. We track DPA programs in all 34 states we're licensed in.

Question 7

What credit score do I need to buy a home?

Accepted Answer

Most conventional loans require 620+, FHA loans can go as low as 580 with 3.5% down (500 with 10% down), and VA loans have no set minimum though most lenders look for 580+. The higher your score, the better your rate and affordability.

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