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The #1 Trusted Source for Veterans and Service Members

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SAME DAY APPROVAL

No Money Down, Low Interest Rates, No Mortgage Insurance

Check Your Eligibility

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Are you looking to purchase or refinance?
What is your goal?
Are you or your spouse retired or active military?
Active Military or Retired?
Are you receiving military retirement or VA Disability pay
Have you received PCS orders?
Where are you in the buying process?
Are you working with a real estate agent?
$350k - $400k
$0
$2m +
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Is this the first use of your VA entitlement?
What is your credit score?
Do you currently have a home to sell?
Do you currently have a VA loan on your property?*
$350k-$400k
$0
$2m +
$200k - $250k
$0
$2m +
$100k -$120k
What is the rate on your loan ?

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Name*

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How Much House Can You Afford?

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$6,500
$3,300
$300

This is what you can afford in San Antonio, TX

$387,707

Affordable

Your debt-to-income ratio (DTI) would be 36%, meaning 36% of your pretax income would go toward mortgage and other debts.

Get Pre-Approved
Mortgage Payment $2,157
Property Taxes $300
Homeowners Insurance $90
HOA Fees $0
Total Monthly Payment $2,547

How Much House Can You Afford?

Buying a home is one of the most significant financial commitments you’ll make. The key to a successful home-buying journey is understanding how much house you can afford. Knowing your budget helps set realistic expectations and ensures you find a home that fits your financial goals.


Home Affordability Explained

Home affordability refers to the maximum price you can pay for a house while maintaining financial stability. This calculation considers your income, monthly debt obligations, down payment savings, and other ongoing expenses like taxes and insurance.


Factors That Influence Affordability

Several elements shape how much you can afford, including:

  • Income: Your earnings are the foundation for your home budget.
  • Debt-to-Income Ratio (DTI): Lenders prefer a DTI under 36%, which ensures manageable debt obligations.
  • Down Payment: A larger down payment reduces your loan amount and monthly costs.
  • Interest Rates: Lower rates increase affordability, while higher rates reduce it.
  • Additional Costs: Property taxes, insurance, and HOA fees add to your monthly payments.

Affordability Guidelines

Financial experts suggest following these general principles:

The 28/36 Rule

  • Spend no more than 28% of your gross income on housing (including taxes and insurance).
  • Total debt payments, including your mortgage, should stay below 36% of your gross income.

Down Payment Recommendations

  • Ideally, save 20% of the home price for a down payment to avoid private mortgage insurance (PMI).
  • VA loans typically require no down payment, making homeownership accessible to more buyers.

Affordability Table

Here’s an example of home affordability based on income:

Annual IncomeMonthly IncomeMax Payment (28% Rule)Estimated Home Price*
$50,000$4,167$1,167$200,000
$75,000$6,250$1,750$300,000
$100,000$8,333$2,333$400,000
$150,000$12,500$3,500$600,000

*Assumes a 30-year fixed-rate mortgage at 6% interest with a 20% down payment.


Additional Costs to Factor In

  • Property Taxes and Insurance: These vary by location and can significantly impact your monthly costs.
  • Maintenance: Set aside about 1% of the home’s value annually for upkeep.
  • HOA Fees: If applicable, these monthly dues cover shared amenities and maintenance.

Using the Home Affordability Calculator

The affordability calculator is a quick and easy way to determine your budget. Simply input your income, debt, and down payment to get an estimate of what you can afford.

Steps to Use the Calculator:

  1. Enter Your Income: Add your annual or monthly pre-tax income.
  2. Input Debts: Include credit cards, car loans, and other recurring payments.
  3. Adjust Down Payment: Indicate how much you’ve saved.
  4. Review Results: Get an estimated home price and monthly payment details.

Tips for Staying Within Budget

Buying a home is exciting, but it’s important to avoid financial strain. Consider these strategies:

  • Get Pre-Approved: This clarifies how much you can borrow.
  • Account for Emergencies: Keep a cushion for unexpected repairs or costs.
  • Be Conservative: Avoid overestimating your income or stretching your budget.
  • Shop Around: Compare loan rates to find the most competitive terms.

Advantages of Understanding Your Budget

Knowing how much you can afford empowers you to:

  • Narrow down your home search efficiently.
  • Negotiate confidently with sellers.
  • Avoid financial stress.
  • Make informed, long-term decisions.

Frequently Asked Questions

How much house can I afford based on my income?

A common guideline is the 28/36 rule: allocate no more than 28% of your gross monthly income to housing expenses and no more than 36% to total debts, including housing.

What is the 28/36 rule in homebuying?

This rule suggests that your mortgage payment should not exceed 28% of your gross income, and your total debt obligations should not surpass 36% of your gross income.

How does my debt-to-income (DTI) ratio affect home affordability?

Lenders use your DTI ratio to assess borrowing risk. A lower DTI indicates better financial health, potentially qualifying you for larger loans or better terms.

How much should I save for a down payment?

While a 20% down payment is traditional, many loans allow for lower down payments, such as 3.5% for FHA loans or even 0% for VA loans.

How do interest rates impact the amount of house I can afford?

Lower interest rates reduce monthly mortgage payments, increasing your purchasing power. Conversely, higher rates raise payments, decreasing affordability.

What additional costs should I consider when buying a home?

Beyond the mortgage, consider property taxes, homeowners insurance, maintenance, utilities, and potential HOA fees.

How does my credit score influence home affordability?

A higher credit score can secure lower interest rates, reducing monthly payments and increasing the amount you can afford to borrow.

Are there tools to help determine how much house I can afford?

Yes, online affordability calculators can estimate your price range based on income, debts, and other factors.

 

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