Buying a home is exciting—but one of the first (and biggest) questions is:
“How much home can I actually afford?”
The answer isn’t just about the price of the house—it’s about your monthly budget, your financial goals, and the full cost of homeownership. Let’s break it down in a simple way so you can move forward with confidence.
Start With Your Monthly Budget
A good rule of thumb:
Your total monthly housing payment should typically be 28%–30% of your gross monthly income. That includes more than just your mortgage—it’s your total housing cost (more on that below).
Example: If your household earns $6,000/month before taxes: 28% = ~$1,680/month housing budget.
That’s a helpful starting point—but it’s not the whole picture.
What’s Included in a Monthly Mortgage Payment?
This is where many buyers get surprised. Your mortgage payment isn’t just the loan, it’s made up of several components:
PITI (Principal, Interest, Taxes, Insurance)
- Principal: The portion that pays down your loan
- Interest: The cost of borrowing
- Property Taxes: Typically included in your monthly payment (escrow)
- Homeowners Insurance: Also often included (escrow)
Important Note: Your actual monthly payment will likely be higher than the “loan-only” estimate you see online.
That’s because it usually includes:
- Property taxes
- Insurance
- Possibly PMI (Private Mortgage Insurance)
This is why getting a personalized estimate or pre-approval is so important.
Don’t Forget These Other Costs
Beyond your monthly mortgage payment, it’s important to plan for:
Upfront Costs
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Ongoing Costs
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This Renting vs. Buying PDF can help guide you along the way with links to online calculators.
How Lenders Determine What You Can Afford
When you apply for a mortgage, lenders look at a few key factors:
- Income: Your total household income helps determine your budget.
- Debt-to-Income Ratio (DTI): This compares your monthly debts to your income. Most lenders look for: 36%–43% total DTI (including your mortgage)
- Credit Score: A higher score can help you qualify for better rates and more flexible updates. Learn to understand your credit score with this helpful PDF.
- Down Payment: The more you put down, the lower your monthly payment may be, but many buyers qualify with less than they think.
Quick Affordability Checklist
Before you start house hunting, ask yourself:
- What monthly payment fits comfortably in my budget?
- How much do I have saved for upfront costs?
- Do I want to keep extra cash on hand after buying?
- How long do I plan to stay in the home?
The Best Next Step: Get Pre-Approved
Online calculators are helpful—but the most accurate way to understand what you can afford is to get pre-approved.
With a pre-approval, you’ll:
- See a realistic price range
- Understand your estimated monthly payment (including taxes & insurance)
- Know exactly what loan options are available to you
At Firstmark, you can get pre-approved in as little as 48 hours.
Final Thoughts
Affordability isn’t just about the home price—it’s about finding a payment and plan that works for your life.
The good news?
Many buyers qualify with lower down payments than expected, and there are more options available than ever before.
Ready to see what you could afford? Get pre-approved today.
Give us a call at (210) 308-7821, or apply now to get pre-approved. Firstmark’s mortgage team can help you compare loan programs, get your pre-approval application completed, and move forward with confidence.
Mortgage rates subject to change until execution of an interest rate lock-in agreement. Firstmark Credit Union is not part of and does not represent any government agency. Membership eligibility required. Firstmark NMLS#643550. Equal Housing Opportunity. Insured by NCUA.
