How much house can you afford?

2-minute readLesson 1 of 7 in Am I ready?Last reviewed October 2026

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The short version

Lenders start with one ratio: your monthly debts, including the new house payment, divided by your monthly income before taxes. This is called your debt-to-income ratio, or DTI.

The house payment includes everything that comes with the home: principal, interest, property taxes, homeowners insurance, mortgage insurance and any HOA dues. The debts are the payments on your credit report, such as car, student loan and credit card payments, plus obligations such as child support. Utilities, phone bills and groceries do not count.

Each loan type treats the ratio its own way. Conventional loans approved through Fannie Mae's automated system go up to 50%. FHA sets no fixed maximum for automated approvals. VA sets no maximum at all and looks at residual income instead. USDA's guideline is 41%, and its automated system can approve more.

The amount a lender approves is not a target. Your own monthly limit should come first, with room for savings, childcare and upkeep on the home.

In Southwest Colorado, two homes at the same price can cost very different amounts each month. Property taxes vary by county and district, and insurance can cost more in wildfire areas or far from a fire station. Rural homes add costs that lenders do not count, such as propane, well and septic upkeep, snow removal and longer drives. Before you settle on a budget, get an actual tax figure from the county assessor and an insurance quote.

Enter your income and monthly debts to see your ratios against each loan type's guideline, the payment that fits and an estimated price.

Affordability calculator. Turn on JavaScript to change the numbers.

Top of the price range$448,000

Conventional, with all debts at 50% of income. A more comfortable budget, at 36%: $286,000.

Your income and debts

Gross monthly income$7,500 a month

$0$30,000

Monthly debt payments$600 a month

$0$5,000

36%41%50%57%

Debts today 8%
House payment at the top of the range 42%

Guidelines, as a share of income: Comfortable 36% · VA standard and USDA guideline 41% · Conventional maximum 50% · FHA working figure 57%.

Debts today take 8% of your income before taxes. At the top of the range, the house payment adds $3,150 a month, for 50% in all. Lenders count the minimum payments on your credit report.

How the range is figured

Lenders compare your total monthly debts, including the new house payment with taxes, insurance and mortgage insurance, to your income before taxes. Conventional loans approved through Fannie Mae's automated system go up to 50% of income for all debts; manually underwritten loans 36%, or up to 45% with strong credit and reserves.

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How lenders count income

Lenders use income before taxes that is steady and likely to continue.

Salary and hourly pay: your base pay, usually supported by a two-year work history. Job changes are acceptable when they make sense.
Overtime, bonus and commission: usually averaged over the last two years, and only if it is likely to continue.
Self-employment: the income your tax returns show after deductions. See buying when you are self-employed.
Other income: Social Security, pensions, disability and support payments can count with proof that they will continue.

Front-end and back-end ratios

The back-end ratio counts all your debts plus the house payment. It is the ratio most approvals depend on. The front-end ratio counts the house payment alone.

VA sets no maximum debt-to-income ratio. 41% is VA's standard; above it, the lender looks closely at residual income, the money left each month after the house payment, debts and taxes. Above 41%, VA asks for residual income at least 20% above its guideline, or a written justification from the underwriter's supervisor. Strong residual income often allows VA to approve veterans whose debt ratio appears high.

Loan	All debts, as a share of income
Conventional	Up to 50% with Fannie Mae's automated approval. Manual: 36%, up to 45% with strong credit and reserves.
FHA	No fixed maximum with automated approval. Manual: 31% and 43%, up to 40% and 50% with compensating factors.
VA	No maximum. 41% is the standard; above it, residual income decides.
USDA	29% for housing and 41% for all debts. The automated system can approve more; a manual approval up to 32% and 44% needs a 680 score.

Debts that surprise people

Student loans in deferment still count. If no payment appears, most programs count a portion of the balance instead.
Loans you co-signed count, unless you can show that the other person has made the payments, usually for the last 12 months.
Paying off a debt to qualify can help. Paying off a small loan removes its entire payment from the ratio. Paying down a credit card lowers its minimum payment only slightly.

Ask us before you move any money, because cash spent on debts may be cash you need at closing.

What lenders do not count, but you should

A lender's calculation leaves out many everyday costs. Before you shop, add up the following:

Upkeep. A common rule of thumb is about 1% of the home's value each year.
Utilities, which can rise sharply in a larger or older home.
Childcare, commuting, and saving for retirement and emergencies.

Then choose the monthly payment you are comfortable with and work back to a price. That number is your budget, even if your approval is higher.

See it with your numbers

Your Mortgage Plan shows your qualifying ratios for each option, figured from your own income and debts.

Get your Mortgage Plan

The “Can you qualify?” section of a Mortgage Plan: income and debt sliders and a debt-to-income meter for each option against its program’s guideline.

Your next step

Lesson 2 of 7 in Am I ready?Where your credit standsYour credit score sets which loans fit and what they cost. VA and USDA set no minimum score, and small changes can move you into better pricing.Read the lesson

Or go another way: I am not sure buying is better than renting