If you’re dreaming of buying your first home or upgrading to a bigger one, the big question is always: “What house mortgage can I afford?”
The answer isn’t just about how much you earn — it also depends on your debts, credit score, down payment, and current mortgage rates.
In this post, we’ll walk you through an easy way to estimate your mortgage affordability and help you set realistic expectations before you start shopping for a home.
Step-by-Step: How to Figure Out What Mortgage You Can Afford
Here’s a simple process to determine your budget:
1. Know Your Monthly Income
Use your gross monthly income (before taxes) — including all income sources if applying with a co-borrower.
Example:
- Monthly salary: $6,000
- Additional income (e.g., side job): $500
→ Total gross income = $6,500
2. Add Up Your Monthly Debts
Include all recurring monthly payments such as:
- Car loans
- Student loans
- Credit card minimums
- Child support
- Other mortgages (if applicable)
Example:
- Car loan: $300
- Student loan: $200
→ Total monthly debt = $500
3. Calculate Your Debt-to-Income Ratio (DTI)
This is one of the most important factors lenders use.
DTI Formula :
(Total monthly debt ÷ gross monthly income) × 100 = DTI %
Example:
($500 ÷ $6,500) × 100 = 7.7% DTI
Most lenders prefer DTI under 43% , but lower is better.
4. Estimate Maximum Mortgage Payment
Using the 28% rule : Your housing payment shouldn’t exceed 28% of your gross monthly income .
Example:
$6,500 × 0.28 = $1,820/month
This includes principal, interest, taxes, insurance, and PMI (if applicable).
Use Our Quick Mortgage Affordability Chart
| $4,000 | $1,120 | ~$170,000 |
| $5,000 | $1,400 | ~$210,000 |
| $6,000 | $1,680 | ~$250,000 |
| $7,000 | $1,960 | ~$290,000 |
| $8,000 | $2,240 | ~$330,000 |
(Note: These are rough estimates and do not include taxes, insurance, or HOA fees.)
Tools to Help You Decide What Mortgage You Can Afford
✅ Online Mortgage Calculators
Tools like Zillow, Bankrate, or Google Finance offer free calculators where you can input:
- Income
- Debts
- Down payment
- Location
- Interest rate
They’ll give you an estimated loan amount and monthly payment .
✅ Get Pre-Approved
A lender can give you a mortgage pre-approval letter that shows exactly how much they’re willing to lend — based on your full financial profile.
Final Thoughts
Knowing what house mortgage you can afford helps you avoid disappointment and shop more efficiently. By understanding your income, debts, and down payment, you can get a clear idea of your budget long before you tour homes.
Remember, affordability isn’t just about how much you can borrow — it’s about how much you can comfortably afford to pay each month without stretching yourself too thin.
Frequently Asked Questions (FAQs)
Q1: What mortgage can I afford on a $60,000 salary?
With a $60,000 annual salary ($5,000/month), you could likely afford a mortgage between $180,000 and $240,000 , depending on debts and down payment.
Q2: How much house can I buy for $1,500 a month?
At current rates, a $1,500 monthly mortgage payment (including taxes and insurance) could get you a home priced around $220,000–$250,000 .
Q3: Should I get pre-approved before house hunting?
Yes! A mortgage pre-approval gives you a clear budget and makes you a more attractive buyer to sellers.
Join The Discussion