How Much House Can You Afford? A Simple DTI-Based Guide
Before you start touring open houses, it helps to know your real number. A listing site can guess based on your income, but the number that actually matters is the one a lender will approve you for. That number comes down mostly to one thing: your debt-to-income ratio, or DTI.
If you just want a fast, rough estimate, a common rule of thumb is that your home price should land somewhere around 3 to 5 times your annual household income. It’s a decent starting filter for browsing listings, but lenders look a lot closer than that once you’re actually applying, which is where DTI comes in.
What Is Debt-to-Income Ratio, and Why Does It Matter?
Your DTI is simply your monthly debt payments divided by your gross monthly income. Lenders use it to answer one question: after you take on a mortgage, will you still be able to cover your bills? The lower your DTI, the more comfortable a lender feels, and often the better your rate.
The 28/36 Rule, Explained
The classic guideline lenders start with is the 28/36 rule:
28% rule: your monthly housing payment (principal, interest, taxes, and insurance) shouldn’t run more than 28% of your gross monthly income.
36% rule: all your monthly debts combined, including the mortgage, car payments, student loans, and credit cards, shouldn’t run more than 36% of your gross monthly income.
Think of these as a flexible starting point. In practice, lenders will often go higher, especially for strong borrowers.
What Lenders Actually Allow in 2026
Real approvals often stretch past 28/36, depending on the loan program:
Conventional loans: automated underwriting commonly approves up to around 45% DTI, and can stretch toward 50% with strong compensating factors like a big down payment, healthy cash reserves, or an excellent credit score.
FHA loans: the standard benchmark is 31% for housing costs and 43% for total debt, but FHA will allow well beyond that, up to the high 50s, when the rest of the file is strong.
VA loans: no set DTI cap. Approvals are based on the full picture of your finances, and VA lenders routinely approve borrowers above the traditional limits.
A Quick Example
Say a borrower earns $7,500 a month before taxes. At a 36% DTI, that’s $2,700 available for all monthly debts combined. If they have a $400 car payment and $150 in minimum credit card payments, that leaves about $2,150 for a mortgage payment (principal, interest, taxes, and insurance).
At today’s average 30-year rate of roughly 6.75%, that monthly budget puts them in the neighborhood of a $300,000 to $320,000 loan amount, depending on their property taxes, insurance costs, and down payment. Run the same numbers with a smaller car payment or a bigger down payment, and that range moves quickly.
Other Things That Affect What You Can Really Afford
Down payment size: a bigger down payment lowers your loan amount and your monthly payment, and can remove mortgage insurance from the equation entirely.
Credit score: a higher score usually means a lower rate, which stretches your buying power without changing your monthly budget.
Property taxes and insurance: these vary a lot by state and county, and they’re part of your housing payment even though they have nothing to do with your loan amount.
Loan program: FHA, conventional, and VA loans each treat income, debt, and mortgage insurance a little differently, which changes what you actually qualify for.
Get Your Real Number
A 28/36 rule of thumb is a good starting point, but the only way to know what you can actually afford is to run your real numbers with a lender. That’s where we come in.
Ready to see your real number? Contact BrightGate Mortgage for a free, no-pressure look at what you qualify for, or explore our home purchase loan options
