How Much House Can I Afford?

When you’re getting ready to buy a home, one question shows up early and refuses to leave: “How much house can I actually afford?”

It’s a fair question—and a crucial one. The goal isn’t to stretch yourself thin for the next 30 years; it’s to set yourself up with a payment that fits comfortably into your real, everyday life. Let’s walk through how Netter Lending helps you figure out that number with clarity instead of guesswork.

How to Know What You Can Afford

The simplest approach is to work backward from your monthly finances. Add up everything you already spend. Subtract that from your monthly income. What’s left is your realistic room for a mortgage payment.

Inside your Netter Lending borrower dashboard, our personalized loan tools can help you visualize affordability instantly. Once you create your account, you’ll get access to calculators and real-time rate scenarios designed to make the math painless.

Here are the major factors that shape your borrowing power:

• Monthly income: This is your gross income—before taxes. Some people stick to the classic “28% rule,” meaning no more than 28% of your monthly income goes toward your mortgage.
• Monthly debts: Car payments, student loans, credit cards—your lender accounts for all of it.
• Regular expenses: Insurance, childcare, club fees, medical costs—anything that hits every month.
• Cash reserves: You’ll need funds for closing costs and possibly a down payment (not always required, depending on your loan type). A full 20% down isn’t mandatory; many buyers qualify with far less.
• Credit profile: Higher credit scores typically mean better interest rates.
• Debt-to-income ratio (DTI): Most buyers aim for a DTI of 36% or lower to qualify for stronger terms.

Life also loves curveballs. A solid emergency fund—three to six months of expenses—helps protect your mortgage if unexpected costs come knocking.

Affording a Home With an FHA Loan

FHA loans are insured by the Federal Housing Administration, which reduces risk for lenders and gives buyers more flexibility. How much you can afford with an FHA loan still depends on your income, debts, expenses, and credit profile.

A few basics:
• Minimum 3.5% down payment with a credit score of 580+.
• FHA sets maximum loan limits based on location—high-cost markets allow higher loan amounts, while lower-cost areas have lower caps.

Check your local FHA limits on HUD’s website to know your regional ceiling.

Affording a Home With a VA Loan

VA loans are backed by the Department of Veterans Affairs and available to eligible service members, veterans, and surviving spouses.

There’s no single “VA affordability number” for everyone—your personal finances still drive the equation. But here’s what makes VA loans powerful:

• No down payment required (though lenders may have guidelines).
• No loan limits for most qualified borrowers.
• A one-time VA funding fee, typically between 1.4% and 2.3%.

Again, your comfort level—not the VA limit—should be your north star when determining affordability.

Picking the Right Home for Your Budget

Start with the non-negotiables. What genuinely matters to you? A chef’s kitchen? A big yard? A quiet neighborhood? Make a shortlist before you start shopping.

Then focus on homes that fit your budget, not homes that tempt you to blow past it. Your real estate agent can help you find options that match your financial plan without sacrificing your needs. If you can find what you want below your max budget, all the better—it gives you breathing room for future expenses.

Is the Monthly Payment Comfortable?

Your monthly payment is shaped by several moving parts: home price, down payment, interest rate, loan program, and loan term.

A helpful guideline is the 28/36 rule:
• Mortgage payments shouldn’t exceed 28% of your gross monthly income.
• Total debts shouldn’t exceed 36%.

More years on the mortgage term mean lower monthly payments; fewer years mean higher payments but far less interest over time.

Example:
• $200,000 at 4% for 30 years → about $954/month (excluding taxes and insurance).
• $200,000 at 4% for 15 years → about $1,479/month.

Same house. Totally different payment.

The Role of PMI

If your down payment is under 20% on a conventional loan, your lender may require private mortgage insurance (PMI). This protects the lender—not you.

PMI can typically be removed once you reach 20–22% equity, depending on the lender’s policies.

Other Costs to Factor In

A mortgage isn’t just principal and interest. Be sure to account for the additional recurring costs of homeownership:

• Property taxes (based on your home’s assessed value)
• Homeowners insurance
• Utilities and maintenance
Many lenders place taxes and insurance into an escrow account, bundling them into your mortgage payment.