How much house can I afford?

A widely used starting rule is to keep your total housing costs — mortgage principal and interest, property taxes, homeowners insurance, and HOA fees — at or below 28% of your gross monthly income. Your back-end debt-to-income ratio (all monthly debts) should generally stay at or below 43% for most mortgage programs.

"How much house can I afford" has two answers: what the math says, and what a lender will approve. The two don't always match. A lender will approve you up to their DTI threshold; financial planners typically advise keeping housing costs below a more conservative threshold to preserve cash flow for other goals.

The 28% rule: front-end housing costs

The traditional guideline is to keep your total monthly housing costs — PITI (principal, interest, taxes, insurance) plus any HOA dues — at or below 28% of your gross monthly income. This is called the front-end DTI ratio. If your gross income is $8,000 per month, the 28% rule suggests keeping total housing costs at or below $2,240/month.

The 43% rule: back-end total debt

Your back-end DTI — all monthly debt payments (mortgage, car loan, student loans, minimum credit card payments) divided by gross income — typically must stay at or below 43% for a qualified mortgage. The CFPB defines a qualified mortgage as a loan where the lender has verified your ability to repay, and 43% back-end DTI is the common threshold. Some loan programs (FHA, VA) allow up to 50% DTI with compensating factors.

Quick affordability estimate

Gross monthly income: $7,500. 28% front-end max: $2,100/month for housing. Assume $550/month for taxes and insurance. That leaves ~$1,550 for mortgage P&I. At 7% interest on a 30-year loan, $1,550/month supports a loan of roughly $233,000. With 10% down ($26,000), that's a $259,000 purchase price. This is illustrative — your actual approval depends on credit score, existing debts, and lender guidelines.

What actually determines your limit

DTI ratio — front-end (housing costs) and back-end (all debts) evaluated against gross income.
Credit score — determines your rate, which directly affects the payment a given loan amount generates.
Down payment — larger down reduces the loan amount and eliminates PMI at 20%.
Existing debt — student loans, car loans, and credit card minimums reduce how much mortgage payment the DTI thresholds support.
Loan type — FHA may allow higher DTI than conventional; VA looks at residual income, not just DTI.

The 'approved' amount vs. the right amount

Mortgage approval is not financial advice. Lenders approve you up to their risk tolerance — that doesn't mean the maximum loan is the right loan for your life. Housing costs that consume 40–45% of gross income leave little margin for savings, emergencies, or income disruption. The CFPB's homebuying tools include budget worksheets to help you model your actual monthly picture.

Sources

A qualified mortgage requires lenders to verify the borrower's ability to repay; the standard DTI ceiling for a qualified mortgage is 43% of gross monthly income. — CFPB — What Is a Qualified Mortgage?
FHA guidelines allow back-end DTI up to 43% with automated approval; higher ratios (up to 50%) may be approved with strong compensating factors. — HUD / FHA
Freddie Mac PMMS weekly rate survey provides current 30-year fixed rates used to estimate what a given monthly payment can finance. — Freddie Mac PMMS

Key takeaways

Keep front-end housing costs (PITI + HOA) at or below 28% of gross monthly income as a starting guide.
Most mortgage programs require back-end DTI at or below 43%; FHA allows up to 50% with strong compensating factors.
Your credit score drives your rate — which directly affects the loan amount a given payment supports.
Lender approval is the ceiling, not the recommendation. Model your full budget, not just the DTI math.
Use the CFPB's Owning a Home tools to build out your specific affordability scenario.

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