How Much House Can I Afford? A Complete Guide to Finding Your Budget

Meta Description: Wondering how much house you can afford? Learn how lenders calculate affordability, what factors affect your mortgage budget, and how to confidently set a price range before you start house-hunting.

Understanding Home Affordability

Buying a home is one of the biggest financial decisions you’ll ever make, and knowing how much house you can afford is the first step toward a confident and successful purchase. While online mortgage calculators are a helpful starting point, truly understanding affordability requires looking at your entire financial picture — from income and debt to down payment and lifestyle.

At ALCOVA Mortgage, we believe that knowing your budget upfront not only helps you shop smarter but also prevents surprises later in the mortgage process. Here’s how to break it all down.

The 28/36 Rule: A Quick Snapshot of Affordability

Most lenders follow a guideline known as the 28/36 rule when determining how much home you can afford:

• 28% of your gross monthly income should go toward your total housing costs (including mortgage, property taxes, and homeowners insurance).
• 36% of your gross monthly income should cover all debt obligations combined (housing, credit cards, student loans, auto loans, etc.).

Example:
If you earn $6,000 per month before taxes:

• 28% = $1,680 for housing costs
• 36% = $2,160 for total monthly debt

This means your mortgage payment and other debts combined shouldn’t exceed $2,160 per month.

Key Factors That Impact How Much House You Can Afford

While the 28/36 rule is a good benchmark, lenders look at several factors to determine your mortgage budget. Understanding these will help you set realistic expectations.

1. Your Income

Lenders consider your gross monthly income as the foundation for affordability. A higher income generally means you can qualify for a larger loan, but it’s equally important to ensure your mortgage payment fits comfortably within your lifestyle.

2. Debt-to-Income Ratio (DTI)

Your DTI compares your monthly debt payments to your income. A lower DTI indicates better financial health and improves your chances of qualifying for a larger mortgage. Most lenders prefer a DTI of 43% or lower, though stricter guidelines may apply for certain loan types.

3. Credit Score

A higher credit score can significantly impact affordability by securing you a lower interest rate — which reduces your monthly payment and increases your buying power. Even a small improvement in your credit score before applying can make a big difference.

4. Pago inicial

Your down payment directly affects how much house you can afford. A larger down payment reduces the loan amount and monthly payment, while a smaller one may require mortgage insurance, slightly raising your costs.

• Conventional loans often require 3%–20% down.
• FHA loans require as little as 3.5%.
• VA and USDA loans may offer 0% down options for qualified borrowers.

5. Interest Rate

Your mortgage interest rate plays a major role in affordability. Even a 1% difference can change your monthly payment by hundreds of dollars. That’s why shopping around and working with a trusted mortgage advisor is so important.

6. Other Costs of Homeownership

Don’t forget about the ongoing costs beyond your mortgage payment, such as:

• Property taxes
• Homeowners insurance
• HOA fees
• Maintenance and repairs
• Servicios

These expenses can add up, so build them into your budget from the start.

Tips to Maximize Your Homebuying Budget

• Pay down debt: Reducing existing debt lowers your DTI and boosts your borrowing power.
• Improve your credit: Even a small credit score increase can unlock better loan terms.
• Save for a larger down payment: This reduces your monthly payment and may eliminate mortgage insurance.
• Get pre-approved early: A pre-approval shows you exactly how much you can borrow and strengthens your offer when you’re ready to buy.

Use Our Mortgage Calculator to Estimate Your Budget

Before you start touring homes, use ALCOVA’s Mortgage Calculator to get a personalized estimate of how much house you can afford. Enter your income, monthly debts, and down payment to see what your price range might look like.

Final Thoughts: Affordability is About Confidence

Understanding how much house you can afford is about more than just numbers — it’s about setting yourself up for long-term financial comfort and success. With the right preparation and a trusted mortgage partner by your side, you’ll be ready to find a home that fits both your lifestyle and your budget.

Ready to start your homebuying journey? Contact ALCOVA Mortgage today to connect with one of our mortgage experts and get pre-approved with confidence.