How Much Home Can You Afford in Today’s Market?

One of the most common questions buyers ask is, “How much home can I actually afford?” In today’s market, the answer depends on more than just the price of the home. It comes down to your income, debts, interest rates, and overall financial comfort.

1. Start With Your Monthly Budget

A general rule lenders use is that your total monthly housing payment should not exceed about 28–31% of your gross monthly income. This payment includes your mortgage, property taxes, homeowners insurance, and HOA fees if applicable.

2. Consider Your Debt-to-Income Ratio

Lenders also look at your debt-to-income ratio, which compares your monthly debts to your income. This includes car loans, credit cards, student loans, and other obligations. Most lenders prefer a total DTI under 43%, though some programs allow higher.

3. Factor in Today’s Interest Rates

Interest rates play a huge role in affordability. Even a small rate change can significantly impact your monthly payment and purchasing power. A higher rate may mean adjusting your price range or increasing your down payment.

4. Don’t Forget the Upfront Costs

Beyond your down payment, buyers should plan for closing costs, inspections, appraisals, and moving expenses. These costs can add up, so it’s important to budget for them early.

5. Get Pre-Approved, Not Just Pre-Qualified

A mortgage pre-approval gives you a clearer picture of what you can afford and strengthens your offer when you find the right home. It’s based on verified financial information, not estimates.

6. Buy What’s Comfortable, Not Just What’s Approved

Just because a lender approves you for a certain amount doesn’t mean you need to spend it all. Choose a payment that still allows room for savings, lifestyle expenses, and unexpected costs.

Final Thoughts

Affordability is personal. The right home price balances lender guidelines with your comfort level and long-term goals. Talking with a trusted lender and a local real estate professional can help you determine a smart and realistic price range before you start shopping.