How much house can I afford?

Start with the monthly payment you are comfortable with, not the biggest loan a lender will approve. Here is a simple way to find that number.

Start with your monthly budget

Look at your take-home pay and what you spend each month today. Many buyers feel comfortable when the full housing payment, including taxes and insurance, stays around a quarter to a third of their gross monthly income.

What lenders look at

Lenders compare your monthly debts with your gross income. This is your debt-to-income ratio. Many conventional loans allow up to about 45 percent, and some go to 50 percent with strong credit and savings. Being approved for that much does not mean it will feel comfortable.

Add the costs people forget

Property taxes, homeowners insurance and, with less than 20 percent down, mortgage insurance are part of the monthly payment. HOA dues, repairs and utilities are not, but they are real. Plan for them before you set your price range.

Turn it into a price

Once you know your comfortable payment, we can turn it into a price range using today's rates and your down payment. A pre-approval then confirms it with a lender, so you can make offers with confidence.