Stop guessing what you can afford. Learn how lenders calculate home affordability — DTI ratios, down payment scenarios, and how to use our Home Affordability Calculator to set your budget.
Lenders use the 28/36 rule as the benchmark for qualification:
Some loan programs allow more — FHA can go to 31% / 43%, and strong-credit borrowers with large down payments sometimes get approved above 36% back-end.
Put this guide into practice with our free tool. No sign-up required.
Use Home Affordability CalculatorDown payment size ripples through almost every part of your mortgage:
| Down payment | Effect |
|---|---|
| 20%+ | Eliminates PMI, best rates, instant equity |
| 10–19% | PMI required, decent rate |
| 3–5% (conventional) | PMI required, tighter approval |
| 3.5% (FHA) | MIP required, lower credit OK |
| 0% (VA/USDA) | No down payment, but funding fee + eligibility rules |
Saving 20% is increasingly hard, and waiting to reach it can cost more in rising home prices than PMI would. Run the math for your market before defaulting to 20%.
Let's model a buyer earning $90,000/year gross, with $400/month in debt, 10% down, at 6.5% interest, and typical 1.2% property tax + $1,400/yr insurance.
| Metric | Value |
|---|---|
| Gross monthly income | $7,500 |
| Max housing (28%) | $2,100 |
| Max total debt (36%) | $2,700 → $2,300 available for housing after debts |
| Max monthly P&I (after tax/ins/PMI) | ~$1,560 |
| Max loan size (30yr @ 6.5%) | ~$246,000 |
| + 10% down → Max home price | ~$273,000 |
Notice the back-end ratio (36%), not the front-end (28%), is the binding constraint here because of the existing debt. Paying down debt before buying directly increases purchasing power.
A lender qualifying you for $500,000 doesn't mean you should spend it. Lenders use gross income and ignore your lifestyle, savings goals, and emergency fund.
A more conservative "comfort" guideline: keep your all-in housing cost at or below 25% of your take-home pay (after taxes, insurance, and retirement contributions). That usually means buying 15–25% less house than the max you qualify for — but it's the difference between house-poor and financially comfortable.
Before you talk to a realtor, know two numbers: the max you qualify for (the lender's number) and the max you're comfortable with (your number). Shop to the second one.
The Home Affordability Calculator on Adept.club applies the 28/36 rule, models down payment and rate scenarios, and shows both the qualified and comfortable budget side by side. Free, no sign-up.
Conventional loans typically require a minimum 620 credit score. FHA loans accept scores as low as 580 with 3.5% down. VA loans have no minimum credit score but most lenders prefer 620+. Better rates are available for scores above 740.
At $60,000 annual income with no debt and a 6.5% rate, you can typically afford a home in the $200,000-$240,000 range with 5-10% down. Your exact budget depends on debt, down payment, and local taxes.
This depends on how long you'll stay in the home. Buying typically makes sense if you'll stay 5+ years to recoup transaction costs. Use a rent vs. buy analysis considering closing costs, maintenance, appreciation, and your specific market.
A pre-approval is a lender's conditional commitment to lend you a specific amount. Get pre-approved before house hunting — it shows sellers you're serious and can make offers immediately when you find the right home.
Put this guide into practice with our free tool. No sign-up required.
Use Home Affordability Calculator