How Much House Can I Afford?
Understanding your affordability is the first step toward a successful home purchase. We look beyond just the purchase price to help you find a monthly payment that fits your life.
The Affordability Formula
Lenders typically use the Debt-to-Income (DTI) ratio to determine your max loan amount. While every loan program is different, here are the general benchmarks:
Front-End Ratio
Typically 28%–31% of your gross monthly income should go toward your housing payment (PITI).
Back-End Ratio
Typically 43%–50% of your gross monthly income can go toward ALL debts (mortgage + cars + credit cards).
Factors That Impact Your Affordability
Your purchasing power isn't just a single number. It changes based on several variables that Rob Miller can help you optimize:
- Interest Rates: A 1% drop in rates can increase your buying power by roughly 10%.
- Property Taxes: Madison property taxes are higher than some surrounding areas; this reduces how much you can borrow for the same monthly payment.
- Down Payment: A larger down payment reduces your loan amount and can eliminate PMI, lowering your monthly obligation.
- Debt Profile: Paying off a $400 car loan can often increase your home buying power by $50,000 or more.
Get a Custom Affordability Audit
Don't rely on generic online calculators. Rob Miller will perform a deep-dive audit of your income, assets, and debts to give you a "To the Penny" affordability breakdown for any property you're considering.
Schedule My Audit