What you can afford depends on your income, monthly debts (your debt-to-income ratio), down payment, credit and the full monthly cost of the home — including taxes, insurance, HOA dues and mortgage insurance. A pre-approval gives you a reliable number.
Start with your income
Lenders look at stable, documentable income: salary or hourly pay, overtime and bonuses with a history, self-employment income, retirement income and some rental income.
Understand your debt-to-income ratio (DTI)
DTI is your total monthly debt payments — including the new house payment — divided by your gross monthly income. For example, $2,800 in total payments on $7,000 a month of income is a 40% DTI. Each loan program has its own limits, and a lower DTI gives you more breathing room.
Count the full monthly payment
Your house payment is more than principal and interest. Plan for:
- Property taxes
- Homeowners insurance (and flood insurance if required)
- Mortgage insurance, if your down payment is under 20% or you use FHA
- HOA dues, if any
- Maintenance and repairs — many owners budget 1% of the home's value per year
Decide on a down payment
You don't need 20% down. Some conventional loans allow 3% down, FHA allows 3.5%, and VA and USDA loans can allow 0% for eligible borrowers. A larger down payment lowers your payment and may reduce mortgage insurance, but keeping some savings in reserve matters too.
Run the numbers, then get pre-approved
Use the mortgage calculator on this site to estimate payments at different prices. Then get pre-approved — Kenny will review your actual income, credit and assets so you know your real number before you shop.
Choose a payment you're comfortable with
The amount you qualify for and the amount you're comfortable paying aren't always the same. Leave room for savings, emergencies and the life you want to live in your new home.
Have a question about your situation?
Kenny offers free, no-pressure consultations — call, text or start online.