Setting a Realistic Home Price Based on Income
A widely used guideline suggests keeping your total monthly housing costs — mortgage principal, interest, taxes, and insurance — under roughly 28% of your gross monthly income. Lenders also look at your total debt load, since a car payment or student loans reduce how much mortgage payment you can comfortably take on. This is why two buyers with the same salary can qualify for very different loan amounts depending on their existing debt.
A few numbers worth checking before you start touring homes:
- Your gross monthly income before taxes
- Your total monthly debt payments (car loans, student loans, credit cards)
- How much you have saved for a down payment and closing costs
Our home affordability calculator combines these factors to show a realistic price range for your situation. If you want to see your maximum borrowing capacity specifically, our home borrowing calculator gives a more detailed breakdown based on your income and debts.