How Much House Can I Afford? 7 Numbers Every Homebuyer Should Know
Buying a home is exciting—but one of the first questions every buyer should ask is also one of the most important:
“How much house can I actually afford?”
The answer isn't simply the maximum amount a lender says you qualify for.
There is a big difference between what you can qualify for and what you can comfortably afford.
A lender evaluates your income, debts, credit and other financial information to determine how much it may be willing to lend. But your personal budget includes things a lender may not fully account for, such as savings goals, travel, childcare, retirement contributions, repairs, lifestyle expenses and the financial cushion you want to maintain.
The Consumer Financial Protection Bureau recommends focusing on a mortgage that fits comfortably within your overall financial priorities—not simply borrowing the maximum amount available to you.
So before you start looking at homes, let's look at the numbers that really matter.
1. Start With Your Gross Monthly Income
Your income is one of the primary factors lenders use when determining how much you may qualify to borrow.
Gross monthly income means your income before taxes and other deductions.
For example, if your household earns $150,000 per year:
$150,000 ÷ 12 = $12,500 gross monthly income
But don't stop there.
If you have bonuses, commissions, self-employment income, rental income or other sources of income, your lender may evaluate those differently depending on your circumstances and documentation.
That's one reason getting pre-approved can be so helpful before you begin seriously shopping. Otherwise, your offer won’t be taken seriously.
2. Know Your Monthly Debts
Next, look at the debts you already have.
These might include:
• Car payments
• Student loans
• Credit card payments
• Personal loans
• Existing mortgages
• Other recurring debt obligations
Lenders often look at your debt-to-income ratio, or DTI.
DTI compares your monthly debt payments with your gross monthly income.
For example, if you earn $10,000 per month before taxes and have $2,500 in qualifying monthly debt payments:
$2,500 ÷ $10,000 = 25% DTI
Different loan programs and lenders can have different requirements, so there isn't one magic number that applies to every buyer. Current DTI for Conventional Loans are 36% to 45%.
3. Determine the Monthly Payment You Are Comfortable With
This may actually be the most important number.
Instead of starting with:
“What's the most expensive house I can buy?”
Ask:
“What monthly payment would allow me to enjoy my home without feeling financially stretched?”
Your total housing expense can include more than principal and interest.
You may also have:
• Property taxes
• Homeowners insurance
• Mortgage insurance
• HOA dues
• Maintenance and repairs
• Utilities
• Potential special assessments
This is particularly important in San Diego County, where HOA dues and property taxes can make a significant difference between two homes with similar purchase prices.
4. Figure Out Your Down Payment
Your down payment can dramatically affect the amount you need to finance.
For example, suppose you're considering a $900,000 home.
A 20% down payment would be:
$180,000
Your mortgage would then be approximately:
$720,000
But putting 20% down isn't the only option.
Depending on the buyer and loan program, there may be financing options requiring substantially less money upfront.
However, putting less than 20% down may result in mortgage insurance and a higher monthly payment.
And there's another important consideration:
Don't use every dollar you have for the down payment. You still want money available for closing costs, moving expenses, repairs and an emergency fund.
5. Pay Attention to the Interest Rate
Interest rates have a major impact on purchasing power.
As of August 24, 2026, Freddie Mac reported an average 30-year fixed mortgage rate of 6.67%.
Your actual rate could be higher or lower depending on your credit profile, loan type, down payment, property and other factors.
Even a relatively small change in the interest rate can affect your monthly payment and therefore the price range you can comfortably afford.
That's why I recommend buyers look at several scenarios, rather than assuming today's rate will remain unchanged throughout the entire home search.
6. Don't Forget the Costs Beyond the Mortgage
One of the biggest mistakes first-time buyers make is focusing only on the mortgage payment.
Owning a home comes with additional expenses.
For example, you may need to budget for:
Property taxes
California property taxes are an important part of your monthly housing budget.
Insurance
Homeowners insurance costs can vary considerably depending on the property, location and coverage.
HOA fees
If you're buying a condo or a property within an HOA, monthly dues need to be included in your affordability calculation.
Maintenance
A homeowner—not a landlord—is responsible for repairs and maintenance. A water heater, air conditioner, roof or major appliance can become a significant expense.
Utilities
Your new home may have substantially different utility costs than your current residence.
7. Leave Yourself Some Financial Breathing Room
This is the part I believe buyers should think about carefully.
Just because a lender says you qualify for a $1 million mortgage doesn't mean you should spend $1 million on a house.
Ask yourself:
Will I still be able to save for retirement?
Can I handle an unexpected repair?
Will I have money left for vacations, entertainment and other things that are important to me?
Would I be comfortable if my expenses increased?
Your home should be part of your financial plan—not your entire financial plan.
So, How Much House Can You Afford?
There isn't one answer that applies to everyone.
Your affordable price range depends on several factors, including:
Income + monthly debts + down payment + interest rate + loan type + property taxes + insurance + HOA + your personal comfort level.
And remember: a pre-approval is a starting point, not a spending requirement.
Before You Start Shopping, Get These Numbers
I recommend having these numbers available:
1. Your gross monthly household income
2. Your monthly debt payments
3. Your available down payment
4. Your estimated credit score
5. Your desired monthly housing payment
6. Your estimated property taxes and insurance
7. Any HOA dues
8. Your expected interest rate
9. Your available emergency savings
10. Your estimated closing costs
Once you have those numbers, you can begin creating a realistic home-buying budget.
The Bottom Line
The goal isn't to buy the most expensive house you qualify for.
The goal is to buy a home you can comfortably afford while still enjoying your life and reaching your other financial goals.
If you're thinking about buying a home in San Diego County, I'd be happy to help you understand the current market, compare neighborhoods and properties, and connect you with the right lending professionals to determine your financing options.
Before you fall in love with a house, know what payment you're comfortable with.
That one step can make the entire home-buying process less stressful—and much more successful.
About Minnie Rzeslawski
Minnie Rzeslawski is a Broker Associate with RE/MAX City Real Estate and Broker/Owner of The 24K Real Estate Group. With 38 years of experience serving buyers and sellers throughout San Diego County, she specializes in residential real estate, probate sales, trust sales, first-time homebuyers, and strategic home marketing. Minnie is committed to educating her clients so they can make confident real estate decisions.
This article is for educational purposes only and is not financial or mortgage advice. Buyers should consult a qualified mortgage professional regarding their individual financing situation.
www.24krealty.com
