Quick answer
How much house you can afford depends mostly on your debt-to-income ratio (DTI). That’s your total monthly debt payments, including the new house payment with taxes and insurance, divided by your gross monthly income. Lenders commonly allow a DTI of about 41% to 50%, depending on the loan program.
Your down payment, credit, interest rate, property taxes and insurance then decide how large a price that payment supports. What a lender approves is the ceiling, not a target.
Guidelines on this page were verified in . Debt-to-income limits are subject to Fannie Mae, Freddie Mac, FHA, VA, USDA and lender guidelines and may change.
At a glance: how much house you can afford
- Key measure: debt-to-income ratio, using gross monthly income
- Typical DTI limits: about 41% (VA, USDA) up to 50% (conventional via automated approval)
- Payment includes: principal, interest, taxes, insurance, mortgage insurance and HOA dues
- Cash needed: down payment, closing costs and reserves
- Comfort check: your real budget, not just the approval
- Estimate: a pre-approval gives you a firm number
How do lenders decide how much you can borrow?
Lenders start with your debt-to-income ratio. Add up your monthly debt payments (car loans, student loans, minimum credit card payments, child support) plus the proposed house payment. Divide by your monthly income before taxes. Utilities, groceries and phone bills don’t count, but every debt on your credit report does.
Example: if your existing debts take 12% of your gross monthly income and the program allows a 45% DTI, up to 33% of your gross income is left for the full house payment. That payment includes taxes and insurance. A car loan paid off before you apply leaves more room for the house.
What debt-to-income ratio does each loan allow?
| Loan type | Typical DTI guideline | Notes |
|---|---|---|
| Conventional | Up to 50% with automated (DU) approval; 36%–45% if manually underwritten | Higher ratios need stronger credit or reserves |
| FHA | 31% housing / 43% total as a baseline; automated approvals often go higher | The most room for borrowers carrying more debt |
| VA | 41% guideline, plus residual income | Strong residual income can support a higher ratio |
| USDA | 29% housing / 41% total; some automated approvals go higher | Household income limits also apply |
Guidelines, not guarantees; lenders may set stricter limits. Sources: Fannie Mae Selling Guide B3-6-02; HUD Handbook 4000.1; VA Lender’s Handbook, Chapter 4; USDA HB-1-3555. Subject to agency and lender guidelines and may change.
What goes into the house payment lenders use?
- Principal and interest, set by the loan amount, rate and term.
- Property taxes. In Tennessee these vary widely by county and city; check your county’s rate in our county guides.
- Homeowners insurance, plus flood insurance if the home is in a flood zone.
- Mortgage insurance: PMI, FHA premiums or the USDA annual fee, if your loan has them.
- HOA dues, if the neighborhood has an association.
Rates matter a lot. The same payment supports a smaller loan when rates are higher, which is why your price range can change even if your income doesn’t. Use our mortgage calculator to try different prices and down payments.
How much cash do you need besides the payment?
- Down payment: 0% to 3.5% on many programs; see how much down payment you need.
- Closing costs: commonly about 2% to 5% of the price; see closing costs vs. down payment.
- Reserves: some loans require savings left over after closing; even when they don’t, a cushion for repairs is wise.
On an illustrative $350,000 Robertson County purchase with 5% down, that means $17,500 down plus roughly $7,000 to $17,500 in closing costs, before any seller or lender credits.
Illustrative example only. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors.
How much house should you buy, not just qualify for?
An approval tells you the most a lender will allow, not what fits your life. Before you shop at the top of your range, build a budget with everything the DTI ignores: utilities, childcare, commuting, savings goals and repairs. Many homeowners set aside about 1% of the home’s value each year for maintenance. Leave room for the life you want to keep living after you move in.
How do you find out your real number?
- Gather income documents: 30 days of pay stubs and two years of W-2s, or two years of tax returns if self-employed.
- List your monthly debts and pay down any you can before applying.
- Get pre-approved. A loan officer runs your credit and income through automated underwriting and gives you a price range and loan type that holds up when you make an offer.
- Re-check before you write an offer if rates or taxes change, so your price still fits.
Home affordability FAQ
Is the 28/36 rule still used?
As a rule of thumb, yes. It says to keep housing costs under 28% of gross income and total debts under 36%. Most loan programs allow more than that, up to about 41% to 50% total depending on the program, but staying near 28/36 leaves more room in your budget.
How much house can I afford on my salary?
It depends on your other debts, the interest rate, property taxes, insurance and down payment, not on salary alone. Two people with the same income can qualify for very different prices. A pre-approval or our mortgage calculator gives you a number for your actual situation.
Does my credit score change how much I can afford?
Yes. A higher score can mean a lower rate and lower mortgage insurance, so the same payment supports a larger loan. Some programs also allow higher debt-to-income ratios for borrowers with stronger credit.
Do lenders use gross or take-home pay?
Gross pay, meaning your income before taxes and deductions. That’s why your own budget, which runs on take-home pay, may say a lower number than your approval.
How do student loans affect affordability?
They count toward your DTI even if they’re deferred or on an income-driven plan. Each program has its own way to calculate the payment when your credit report shows a zero payment, so ask your loan officer how your loans will be counted.
Where these figures come from
| Figure | Source | As of |
|---|---|---|
| Conventional DTI limits | Fannie Mae Selling Guide B3-6-02 | Retrieved Oct 26, 2026 |
| FHA qualifying ratios | HUD Handbook 4000.1 | Current handbook |
| Closing costs of 2%–5% | Freddie Mac, My Home | Retrieved Oct 26, 2026 |
| What counts in DTI | CFPB, Ask CFPB | Retrieved Oct 26, 2026 |
Related guides
- Mortgage calculator.
- How much down payment do you need?
- How to buy your first home.
- Will changing jobs hurt my loan application?
- Robertson County mortgage guide.
- About Christopher Armantrout, the licensed originator who wrote this page.
Want your real price range? Talk to Valor Mortgage.
A pre-approval turns guesswork into a number you can shop with. I’ll run your income and debts through each program you qualify for and show you the price range and cash needed for each, anywhere in Tennessee.
Call me at (615) 671-9178. That’s the fastest way to get a straight answer on what you’d qualify for and what price range actually fits your budget.
If it’s after hours, grab a time on my calendar. Pick a slot that works and I’ll call you then.
If your life is too chaotic for a phone call right now — I understand — start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.