Dreaming of homeownership but unsure what your budget should be? Before you start house hunting, here’s how to find your financial comfort zone.
In today’s housing market, knowing how much home you can afford isn’t just helpful—it’s essential. Rising property values and varied loan options make it more important than ever to understand your financial limits before you fall in love with a home that’s out of reach.
Fortunately, a few simple calculations can bring clarity to your search and set you up for long-term financial success.
Understand Your Debt-to-Income (DTI) Ratio
Lenders use your DTI ratio to assess how much of your income goes toward monthly debt obligations.
- Front-end DTI: Housing expenses only (ideally ≤ 28% of gross monthly income)
- Back-end DTI: All monthly debts (ideally ≤ 43%, though some programs allow higher)
Estimate a Comfortable Monthly Mortgage Payment
Consider your income, current expenses, lifestyle, and savings goals. Just because you qualify for a certain amount doesn’t mean you should borrow the max.
Budget for More Than the Mortgage
Homeownership includes more than principal and interest. Be sure to factor in:
- Property taxes
- Homeowners insurance
- HOA dues (if applicable)
- Utilities and maintenance costs
Get Pre-Approved for a Loan
A pre-approval gives you a lender-reviewed budget based on your credit, income, and financial documents—giving you real buying power and confidence when shopping.
Use Online Tools (With Caution)
Mortgage calculators can help estimate affordability, but they don’t replace a detailed conversation with a licensed Loan Officer who understands your full financial picture.
Pro Tip: A smart rule of thumb is the “28/36 rule”: Keep your monthly housing expenses below 28% of your gross income, and your total debt payments below 36%. These limits help protect you from being “house poor” and ensure long-term affordability.
Not sure how much house fits your budget? Let us help you break it down. Our team can review your financial picture, explain your options, and guide you toward a number that feels right—not just looks good on paper.
Contact LoanWorks to schedule your free affordability consultation.
📞 855-LOANWORKS (855.562.6769)
✉️ Sales@LoanWorks.ai
Disclosures: LoanWorks, Inc. is a mortgage broker licensed in multiple states. All information provided on this blog is for general informational purposes only and does not constitute an offer to lend or a commitment to approve any loan. Loan terms, rates, and eligibility are subject to change without notice and may vary based on creditworthiness, property type, and other factors. Not all applicants will qualify.LoanWorks, Inc. does not guarantee approval, rate, or term and does not make any express or implied claims about the availability of specific programs or products.
By refinancing an existing loan, total finance charges may be higher over the life of the loan. Always consult with a licensed LoanWorks representative for details specific to your financial situation.
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