“How much home can you afford?” It’s one of the first—and most important—questions for any homebuyer. The first thing to recognize is that everyone’s financial situation is different, and it is important to understand what you can comfortably afford to borrow before you begin your home search.
Lenders consider many factors in determining the amount you qualify for; but in general, the loan amount you can afford will depend on three important factors:
Your debt-to-income ratio (DTI)
Your debt-to-income ratio (DTI) compares your monthly debt payments to your gross monthly income. In simple terms, it shows how much of your income is already committed to things like credit cards, car loans, and student loans.
Why it matters: A lower DTI means you have more room in your budget for a mortgage payment—often increasing how much you can qualify to borrow.
Quick takeaway: Lower debt = more buying power
Your loan-to-value ratio (LTV)
Your loan-to-value ratio (LTV) measures how much you’re borrowing compared to the home’s value. It’s directly tied to your down payment. Put 10% down → your LTV is 90% Put 20% down → your LTV is 80%
Why it matters: A lower LTV (larger down payment) can help you secure better loan terms and potentially lower your monthly payment.
Quick takeaway: Bigger down payment = stronger loan position
Your credit score & history
Your credit score and history help lenders evaluate how likely you are to repay your loan.
Why it matters: Your credit score impacts: Whether you’re approved How much you can borrow The interest rate you receive In general, a higher credit score can lead to a lower interest rate—which can save you thousands over the life of your loan.
Quick takeaway: Higher credit score = better loan terms
While these three factors play a major role, every borrower’s situation is unique. The best way to understand what you can afford is to review your numbers with a mortgage professional. Connect with our team today to get a personalized breakdown and take the next step toward homeownership.
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