How much house can I afford?
Using Texas: property tax 1.63% of value, home insurance $4,200/yr, typical home price $300,000, cost of living index 93 (US = 100).
House price this budget supports
- Maximum housing payment
- $2,100
- Principal + interest
- $1,342
- Loan amount
- $212,319
- Deposit applied
- $40,000
- House price this budget supports
- $252,319
Based on the 28/36 guideline: housing under 28% of gross income and all debt under 36%. A lender may approve more than this — that is not the same as it being affordable.
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The short answer
Affordability is set by the monthly payment, not the price tag. Keep housing under 28% of gross income and all debt payments under 36%, then work backwards through the rate and term to the loan — and add your deposit to get the price.
Today's best 30-year fixed mortgage rates
Rates shown are indicative national averages. Your own rate depends on credit score, down payment, loan size and location — a lender quote is the only number that binds.
| Loan type | Interest rate | APR | What it means |
|---|---|---|---|
| 30-year fixed | 6.42% | 6.55% | Lowest monthly payment, most interest paid overall |
| 20-year fixed | 6.18% | 6.33% | Middle ground on payment and total interest |
| 15-year fixed | 5.61% | 5.79% | Highest payment, far less interest |
| FHA 30-year fixed | 6.12% | 7.03% | Lower credit score bar, mortgage insurance applies |
| VA 30-year fixed | 5.98% | 6.24% | Eligible service members, usually no down payment |
| 5/1 ARM | 6.05% | 7.11% | Fixed for five years, then adjusts |
Approval is not affordability
A lender prices the risk that you stop paying, not the life you want to fund alongside the mortgage. Approval amounts routinely sit above the number that still leaves room for saving, childcare and repairs.
Costs the price tag hides
Property tax and insurance, which move independently of your loan.
Maintenance: budget roughly 1% of the home value each year.
Closing costs, usually 2-5% of the price, paid up front.
Mortgage insurance when the deposit is under 20%.
The formula
Housing cap = min(28% of gross monthly income, 36% of income - other debt). Loan = present value of (cap - tax - insurance). Price = loan + deposit.
FAQ
First time home buyer steps from budget to closing
Before viewing homes, review income, debt, savings, credit, and the full monthly cost of ownership. A mortgage payment is only one component; property taxes, homeowners insurance, mortgage insurance, HOA dues, utilities, maintenance, and repairs may also apply. A debt to income ratio calculator provides a planning estimate, but a lender’s underwriting rules determine how debts and income are treated for a loan application.
Mortgage preapproval can help define a conditional financing range, but it is not final approval or a requirement to spend the full amount. Compare loan estimates from lenders, including the interest rate, annual percentage rate, points, lender fees, cash to close, and projected payment. An offer may involve earnest money, inspection terms, financing conditions, appraisal issues, and title review. Escrow and title insurance serve different purposes and should be reviewed separately.
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