How Much House Can I Afford? A Complete Guide to Setting Your Home Budget
How much house can I afford? Quick answer: Most lenders recommend spending no more than 28% of your gross monthly income on housing costs (the “front-end ratio”) and no more than 36% on total debt payments (the “back-end ratio”). On a $75,000 annual salary, that translates to roughly a $250,000–$310,000 home depending on your down payment, interest rate, and local property taxes.
But the real answer is more nuanced than any calculator can tell you. At Integrity Home Lending, we help buyers understand not just what they qualify for, but what they can comfortably afford — because the last thing we want is for your dream home to become a financial burden.
The 28/36 Rule: Your Starting Point
The 28/36 rule is the industry standard that most lenders use to evaluate affordability:
- 28% Rule (Front-End Ratio): Your monthly mortgage payment — including principal, interest, taxes, and insurance (PITI) — should not exceed 28% of your gross monthly income.
- 36% Rule (Back-End Ratio): Your total monthly debt payments (mortgage + car loans + student loans + credit cards + any other debt) should stay below 36% of your gross monthly income.
What This Looks Like in Practice
| Annual Income | Max Monthly Housing (28%) | Estimated Home Price* |
|---|---|---|
| $50,000 | $1,167 | $170,000–$210,000 |
| $75,000 | $1,750 | $250,000–$310,000 |
| $100,000 | $2,333 | $340,000–$420,000 |
| $150,000 | $3,500 | $510,000–$630,000 |
*Assumes 6.5% interest rate, 10% down payment, and average property taxes. Your actual number may differ — get your personalized estimate here.
5 Factors That Determine How Much House You Can Afford
1. Your Credit Score
Your credit score directly impacts the interest rate you’ll receive. A borrower with a 760+ score might get a rate 0.5–1.0% lower than someone with a 640 score. On a $300,000 loan, that difference can mean $100–$200 per month — or $36,000–$72,000 over the life of a 30-year loan. This is a critical part of answering how much house can I afford for your situation.
2. Your Down Payment
The more you put down, the more house you can afford because you’re borrowing less. Down payment requirements vary by loan type:
- Conventional loans: As low as 3% down
- FHA loans: 3.5% down with a 580+ credit score
- VA loans: 0% down for eligible veterans
- Jumbo loans: Typically 10–20% down
3. Your Existing Debt
Every dollar you pay toward car loans, student loans, or credit card minimums reduces how much mortgage you can qualify for. If you’re carrying significant debt, paying down high-interest balances before applying can dramatically increase your purchasing power.
4. Interest Rates
Even small rate differences have an outsized impact on affordability. A 1% increase in rates reduces your purchasing power by roughly 10%. This is why locking in the right rate at the right time matters — and it’s something your Loan Officer at Integrity Home Lending can help you navigate.
5. Property Taxes and Insurance
These are often overlooked. In Georgia, the average effective property tax rate is about 0.87%, but it varies significantly by county. Fulton County rates differ from Forsyth County rates. A $300,000 home might cost $2,600/year in one county and $3,800 in another — a $100/month difference that directly affects your budget. When calculating how much house can I afford, these hidden costs matter.
Stop Guessing. Get Your Real Number.
Online calculators give you estimates. A pre-qualification from Integrity Home Lending gives you a real number based on your actual financial picture — your credit, your income, your goals. It takes minutes, not hours, and it’s completely free.
The Hidden Costs Most Buyers Forget
The purchase price is just the beginning. Smart buyers budget for these additional costs:
- Closing costs: Typically 2–5% of the loan amount ($6,000–$15,000 on a $300,000 loan)
- Private Mortgage Insurance (PMI): Required if your down payment is less than 20% on a conventional loan — usually $50–$200/month
- Homeowner’s insurance: $1,200–$3,000/year depending on location and coverage
- HOA fees: $200–$500/month in many communities
- Maintenance: Budget 1–2% of your home’s value annually for upkeep
- Utilities: Often higher than what you paid renting
How Different Loan Types Affect Your Buying Power
The type of mortgage you choose can significantly expand or limit what you can afford:
| Loan Type | Min. Down Payment | Min. Credit Score | Best For |
|---|---|---|---|
| Conventional | 3% | 620 | Good credit, stable income |
| FHA | 3.5% | 580 | Lower credit, first-time buyers |
| VA | 0% | No minimum* | Veterans and active military |
| Jumbo | 10–20% | 700+ | Homes above conforming limits |
| Non-QM | Varies | Varies | Self-employed, non-traditional income |
*Most VA lenders look for 620+, though the VA itself has no minimum.
How Much House Can I Afford? Think Beyond the Calculator
Here’s what we tell every borrower at Integrity Home Lending: don’t buy the most expensive home you qualify for.
Lenders approve you based on debt-to-income ratios. But those ratios don’t account for your retirement savings goals, your kids’ college funds, the vacations you want to take, or the emergency fund you need. A mortgage that looks affordable on paper can feel crushing if it leaves no room for the rest of your life.
Our approach is different. We sit down with you, understand your full financial picture, and help you find a mortgage that fits your life — not just your income-to-debt ratio.
Frequently Asked Questions
How much house can I afford on a $60,000 salary?
Using the 28% rule, you can afford approximately $1,400/month in housing costs. With a 10% down payment and a 6.5% rate, that translates to roughly a $200,000–$240,000 home. However, your exact number depends on your debts, credit score, and down payment. Get pre-qualified for a personalized answer. Asking how much house can I afford means looking beyond just the mortgage payment.
Should I wait for interest rates to drop before buying?
Trying to time the market is risky. Rates are unpredictable, and home prices tend to rise over time. The common wisdom in real estate is: “Marry the house, date the rate.” Buy when you find the right home at the right price, then refinance later if rates improve.
How much should I save before buying a house?
At minimum, save enough for your down payment (3–20% depending on loan type), closing costs (2–5% of the loan amount), and 3–6 months of mortgage payments as an emergency fund. For a $300,000 home with 5% down, that’s roughly $30,000–$45,000.
Does getting pre-qualified affect my credit score?
Pre-qualification typically involves a soft credit pull, which does not affect your credit score. Pre-approval may involve a hard inquiry, but the impact is minimal (usually 5 points or less) and temporary. The answer to how much house can I afford depends on your complete financial picture.
Can I afford a house if I have student loans?
Yes. Student loans affect your debt-to-income ratio, but they don’t disqualify you. FHA loans, for example, are designed for buyers with existing debt. The key is understanding how your monthly student loan payment impacts your maximum mortgage amount — which is exactly what we calculate during pre-qualification. Understanding how much house can I afford starts with getting pre-qualified by a trusted lender.
Ready to Find Out What You Can Afford?
Skip the guesswork. Our Loan Officers will give you a clear, honest answer based on your actual financial situation — no obligation, no pressure.
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Or call us directly: 877-445-3631
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