Guide · United States
Mortgage Affordability Guide: How Much House Can You Afford?
Last updated 2026-06-27 · Published 2026-06-27
Determine your maximum home purchasing budget. We break down the debt-to-income (DTI) ratios, credit score impacts, and the hidden costs of homeownership.
How Lenders Define Your Borrowing Limit
Lenders determine your borrowing power by analyzing your income, existing debts, and credit history. Instead of guessing what you can afford, they apply strict risk formulas to ensure you do not become 'house poor.'
The main metrics they evaluate are your debt-to-income (DTI) ratios. Having low debt and a stable income are the best ways to maximize your approval amount.
The Front-End and Back-End DTI Ratios
The Front-End Ratio (Housing DTI) measures the percentage of your gross monthly income that goes toward housing costs (PITI: Principal, Interest, Taxes, and Insurance). Most conventional lenders prefer this to be 28% or lower.
The Back-End Ratio (Total Debt DTI) measures the percentage of your income that goes toward all recurring monthly debt payments, including housing plus credit cards, car loans, and student loans. Lenders prefer this to be 36% or lower.
How Your Credit Score Affects Affordability
Your credit score has a direct impact on the interest rate lenders offer you. A higher credit score qualifies you for lower interest rates.
Because a lower interest rate reduces your monthly payment, it also improves your front-end and back-end DTI ratios, allowing you to borrow more money with the same level of income.
Try the numbers yourself
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Go to calculator →Frequently asked questions
Can I qualify for a mortgage with a DTI above 36%?
Yes, many loan programs allow higher DTI ratios. For example, FHA loans often approve back-end ratios up to 43% (and sometimes higher with strong compensating factors like high credit scores or significant cash reserves).
What are the hidden costs of buying a home?
On top of your mortgage payment, you must budget for property taxes, homeowners insurance, private mortgage insurance (PMI), homeowners association (HOA) fees, and regular home maintenance costs (usually estimated at 1% of the home value per year).
Educational content only—not mortgage, tax, or legal advice. Confirm any decision with a licensed professional in your jurisdiction.