How Much House Can I Afford?

1) Start with payment capacity, not listing price

Estimate a monthly housing ceiling using both front-end and back-end debt-to-income limits. Use the lower of the two outputs as your planning cap.

• Front-end DTI: housing payment divided by gross monthly income
• Back-end DTI: housing plus debt payments divided by gross monthly income
• Treat this cap as a ceiling, then set a lower target for flexibility

2) Include all ownership costs

Affordability mistakes usually come from ignoring non-mortgage costs. Build your monthly estimate with principal, interest, taxes, insurance, HOA, and baseline maintenance.

• Property tax and insurance often rise over time
• Maintenance can vary widely by home age and region
• HOA and utilities can materially change total payment

3) Protect cash reserves after closing

Down payment and closing costs are not enough. Leave reserves for repairs, job changes, and emergency spending so the home does not become a liquidity risk.

• Model your post-closing emergency fund explicitly
• Budget for move-in and near-term repairs
• Avoid spending all discretionary cash on down payment alone

4) Stress-test before making offers

Run conservative scenarios to avoid overfitting to one optimistic assumption set.

• Increase rate assumption by at least 0.5-1.0%
• Increase maintenance and tax assumptions
• Test a temporary income reduction case

If the budget still works under stress, your target range is more robust.

Run the Numbers

Use the Home Affordability Calculator for DTI-based limits, then verify payment composition with the Mortgage Calculator.