How much house can I afford? Lender math and the math you should use

“How much house can I afford?” usually gets one answer: whatever the bank approves. That’s the ceiling, not the answer. Here are both numbers: how lenders count your income and debts, the most the debt-to-income rules allow at each salary, and the math I use to find a payment you’ll still like five years from now.

What is a debt-to-income ratio for a mortgage?

It’s your monthly debt payments divided by your gross monthly income, meaning income before taxes. Lenders look at it two ways. The front-end ratio is the new house payment alone: principal, interest, taxes, insurance, mortgage insurance and any HOA dues. The back-end ratio adds every other monthly debt on top. The back end decides most files, and it’s the one buyers don’t see coming.

Gross is the catch. The bank counts 100% of your pay, but after taxes and payroll deductions you’re really only getting about 70% of it. That’s why a ratio a lender is happy with can still feel tight in your actual checking account.

What you earn doesn’t change your interest rate. It changes what you qualify for. Your rate follows your credit, which is its own page: credit scores for a mortgage.

What DTI do you need for a mortgage?

Lower than the maximum, ideally. The ceilings by program:

• Conventional: Fannie Mae’s automated system allows up to 50%, and in my files that’s where conventional tops out. A manually underwritten Fannie Mae loan starts at 36% and can stretch to 45% with the required credit score and reserves.
• FHA: HUD’s handbook sets no fixed ratio cap when FHA’s automated system approves the file, so FHA can allow a higher ratio than conventional, which is one reason a pricier purchase sometimes moves from conventional to FHA.
• VA: the standard is 41% or less. Above that, a loan can still be approved with a written justification, and that extra review isn’t required when your residual income beats VA’s table by at least 20%. For a family of four in Virginia on a loan of $80,000 or more, the table’s residual income figure is $1,003 a month.
• Manual underwriting: when the automated system refers a file to a person, the ratio limits get hard and low. Part of my job is keeping you in the automated lane.

Where people actually land: in my files, 45% is the all-American debt ratio, mostly because of cards and car loans, and most closings run in the 40s. The mid-30s is healthy. At 48% to 49%, the margin for error is zero, and a price bump for a repair can break the file.

My quick way to find your maximum house payment: take gross monthly income times 45%, then subtract your other monthly debts.

What counts as debt when you apply

The monthly payment counts, not the balance. Credit cards count at their minimum payment, which is why five small cards with $25 to $50 minimums can eat up a ratio. Everything with a required payment goes in: car loans, personal loans, student loans, an IRS payment plan, child support or alimony you pay, HOA dues, and the full payment on any home you keep, unless rent offsets it (covered below). A debt that isn’t on your credit report still counts if it shows up in your statements, and a new debt taken on before closing counts too.

A few rules that trip people up:

• Student loans usually count even when deferred or at $0, and each program counts them differently. The program-by-program rules are on student loans and debt-to-income.
• A debt someone else pays still counts by default. Fannie Mae can leave it out once that person shows 12 months of on-time payments from their own account, and FHA can when that person is also legally on the debt and has made the last 12 payments on time. Money you send them to cover it breaks the chain. USDA keeps a student loan someone else pays in your debts either way.
• An installment loan that’s almost paid off is generally left out of the ratio on a Fannie Mae loan when ten or fewer payments remain. Other programs set their own rules, so don’t pay one off just because it’s almost done.
• A 401(k) loan generally stays out of the ratio on a Fannie Mae loan, as long as the lender has the loan paperwork, but the amount you borrowed comes off the retirement balance that counts toward reserves. Other programs can treat it differently.

Paying a debt off is the most direct way to buy more house, and the payment is what matters. At the ceiling, every $100 a month of debt is about $13,800 of home price at an example rate of 6.5%.

So go after the big payment on the small balance first. A car with $9,000 left and a $450 payment frees far more room per dollar than a student loan counted at a fraction of its balance. And if you’re tempted by a new truck while you’re house shopping, leave it alone until we close.

How lenders count your income

Income is the biggest lever on the ratio, so I calculate it before we talk price. The lender counts what you can document, before taxes, using your last 30 days of pay stubs, two years of W-2s and, when needed, two years of tax returns. The pay stubs tell me more than your W-2s, because base pay, overtime, bonus and commission are each calculated separately.

Salary counts as your current annual salary divided by 12. A documented raise counts at the new rate.

Hourly pay is your rate times your hours per pay period times your pay periods per year, divided by 12:

Overtime, bonus and commission need history. In my files that’s about two years. Twelve to 18 months can work with strong positive factors, like the same employer and a steady record, but I don’t promise it. I run several versions, a two-year average, last year plus this year to date, this year alone, and use the strongest one I can defend to an underwriter. If last year was unusually high, expect the lower number. A commission job under a year old usually has to wait for its first tax return.

A second job counts once you have about two years of working both at the same time.

Self-employed income comes from your tax returns after write-offs, averaged, not from what you deposit. Your income doesn’t increase until you file taxes. The details are on self-employed mortgages.

Rent from a home you keep depends on the program. Fannie Mae, since September 2, 2026, counts 75% of the home’s market rent (not a lease) and only to offset that home’s own payment, and it wants six months of reserves on it if you’re new to being a landlord. FHA can add positive rent to your income but has conditions, including a move of more than 100 miles, a one-year lease and at least 25% equity shown by an appraisal. The full rules are on renting out your current house.

VA disability and other non-taxable income can be grossed up for the ratio because you don’t pay tax on it. How much depends on the program: Fannie Mae adds 25%, so $2,000 a month counts as $2,500, and FHA adds 15%, or your prior-year tax rate if that’s higher. Other programs set their own figure, and I check it on your file.

Social Security counts at the gross amount on your award letter, not the deposit after Medicare comes out. Only the part that isn’t taxed can be grossed up, and the lender has to document that part, so I skip it unless the file needs the room.

Income you can’t document doesn’t count, and income that never made it onto a tax return doesn’t count either.

How much house can I afford on my salary?

Here’s my guide of 3 to 5 times gross income at each salary, with the house payment at each end of it, next to the ceiling the 50% ratio allows.

This is an illustration, not an approval, computed from stated assumptions: a conventional 30-year fixed loan at an example rate of 6.5%, 5% down, a 740 credit score with mortgage insurance from published 2026 rate cards (including their surcharge above 45% DTI), Chesterfield County’s 2026 tax rate of $0.89 per $100, homeowners insurance of $1,500 a year, no HOA and no other monthly debts. Every $100 a month of car, card or student loan payments lowers the ceiling by about $13,800. At $200,000 of income, the ratio alone would allow about $1.13 million, but with 5% down the loan passes the 2026 conforming loan limit of $832,750 at a price of about $877,000. Above that it’s a jumbo loan, with its own rules.

Look at the payment at 5x. At an example rate of 6.5%, a home at 5 times your income already puts the payment near 45% of your gross pay, before any car payment. That’s why 5 times is my maximum, not my target. At 3 times, you’re near 27%, which leaves room to save. Run your own numbers, with your county and your debts, in the affordability calculator.

The math you should use: approved isn’t the same as comfortable

I’ll tell you what you can buy, but that doesn’t mean you should. The approval is a ceiling. My goal isn’t to push you into a house or into debt, and it isn’t to talk you out of one either. Please don’t cut yourself off at a dollar amount before you’ve seen the real payments.

Three numbers, not one. Before you shop, I ask you for two of them, once for the monthly payment and once for cash to close: what you plan to spend, and what you’re willing to spend, meaning the most you could spend before it keeps you up at night. The third is what the bank says, and I show you that one. Most people shop at the plan number and keep the willing number for the one house they’d hate to lose.

See the spread. Each step up in price costs a set amount every month. This is my payment ladder for a $100,000 earner with no other debts, using the same assumptions as the table:

Every $50,000 of price is about $360 a month here. Whether that’s worth it is your call. A bigger payment on a home you love can be a joy, and a smaller one on a house you can’t stand is a burden. Just make sure the bigger one still leaves room to save.

Plan for your life, not just today. If a baby, one income, a career change or retirement is coming, size the house for that version of your budget.

Use the Wheel of Wealth sizing. The first box of my Wheel of Wealth is the home, at 3 to 5 times your gross income, with 3 the conservative end if you’re near retirement or tend to spend loose. The second box is six months of reserves left in savings after you close. I want you to never sell scared. A low payment with no money behind you is the worst spot to be in, and stretching toward the ceiling without reserves is how a good house becomes a bad year.

Chasing a payment? If you have a hard monthly number, keep the loan type the same and move the down payment in 5% steps until the payment fits. If we want the payment lower, cash to close goes up. If it takes a huge down payment to hit your number, the house is probably too much house.

Start with your own numbers in the calculator, then send me your pay stubs and debts. I’ll build your ladder with your real taxes, insurance and income, and tell you where your comfortable number sits next to the bank’s.