Buying a home is exciting, but figuring out how much you can realistically afford can feel overwhelming. The good news? You don’t have to guess. With a few simple guidelines, you can get a clear picture of what price range and monthly payment fit your budget.
Here’s a straightforward framework to help you feel confident before you shop.
Start With Your Monthly Comfort Zone
Most lenders look at two numbers when reviewing affordability:
1. Your Monthly Income
Use your gross monthly income — the amount you earn before taxes.
2. Your Monthly Debts
This includes:
- Car payments
- Student loans
- Credit cards
- Personal loans
- Child support/alimony
These two pieces help determine your debt-to-income ratio, or DTI.
Keep Your DTI in a Healthy Range
Lenders generally want to see:
- Front-end DTI (housing only): around 28% of your income
- Back-end DTI (housing + all debts): 36%–45%, depending on your loan program
Some programs allow higher DTIs, but staying in this range helps keep your payment comfortable.
Break Down the Full Monthly Payment
Your mortgage payment isn’t just principal and interest. Here’s what’s included:
🏠 Principal & Interest
The actual loan payment.
💰 Property Taxes
Varies by county — some parts of Colorado, Nebraska, and Wyoming differ significantly.
🔒 Homeowners Insurance
Usually required by your lender.
🏷 Mortgage Insurance (if applicable)
Required if you put less than 20% down (but it can be removed later).
🏘 HOA Dues (if applicable)
Townhomes, condos, and some neighborhoods include HOA fees that count toward your DTI.
This full number — often called “PITI” — is the figure that needs to fit your income.
A Quick Rule of Thumb
A simple affordability guideline:
Your monthly mortgage payment should be 25%–33% of your gross monthly income.
For example:
- If you earn $6,000/month, a comfortable range is:
$1,500–$2,000/month
With today’s rates, that typically supports a purchase price around:
$350,000–$450,000,
depending on:
- Down payment
- Taxes
- HOA
- Loan program
Don’t Forget Your Comfort Level
Lenders determine what you qualify for.
You determine what you’re comfortable with.
Ask yourself:
- What monthly payment feels right?
- What other lifestyle expenses matter?
- Do you prefer lower monthly payments or lower upfront costs?
Your comfort zone matters just as much as the numbers.
You Don’t Have to Figure This Out Alone
If you want to know your exact affordability range — including taxes and insurance for the specific counties you’re looking in — I can run a personalized scenario.
I’ll help you understand:
- Your ideal price range
- Your estimated monthly payment
- What loan programs you qualify for
- How to compare different down-payment options
- Strategies to lower your payment (including buydowns)
Ready to see what you can afford?
I’m happy to run the numbers and give you a clear, simple breakdown — no pressure, no sales pitch.