Lenders measure affordability with your debt-to-income ratio (DTI): total monthly debts, including the new housing payment, divided by gross monthly income. Many approvals land between 43% and 50% DTI depending on the program and your file. Your maximum housing payment equals gross monthly income times the allowed DTI, minus your other monthly debts.
Worked example
- Gross monthly income: $9,000
- Other monthly debts (car, student loan, card minimums): $500
- Allowed DTI for this example: 45%
- $9,000 × 45% = $4,050 total allowed debt
- $4,050 − $500 = $3,550 maximum housing payment
That $3,550 must cover principal, interest, property tax, homeowners insurance, mortgage insurance and any HOA dues. The price it supports depends on your rate and down payment. Run it in the affordability calculator.
What raises your number
- Paying off or paying down monthly debts
- A larger down payment, which lowers the loan amount and mortgage insurance
- Adding a co-borrower's income
- Rental income from a 2–4 unit you'll live in (see house hacking)
What lowers it
- High HOA dues or property taxes
- New debt before closing
- Variable income without enough history
Common questions
What DTI do lenders allow?
It varies by program and file. Many automated approvals land between 43% and 50%. Stronger credit, reserves and down payment support higher ratios.