Question 1

What is a good debt-to-income ratio for a mortgage?

Accepted Answer

Most lenders prefer a DTI ratio below 36%, with no more than 28% going toward housing expenses. However, FHA loans may allow DTI ratios up to 43%, and some lenders go as high as 50% for well-qualified borrowers. A lower DTI gives you more financial breathing room.

Question 2

How much house can I afford on a $100,000 salary?

Accepted Answer

On a $100K salary with minimal debt, you could potentially afford a home between $300,000 and $400,000, depending on your down payment, interest rate, and local property taxes. The 28/36 rule suggests your mortgage payment should not exceed $2,333/month.

Question 3

What costs are included in a monthly mortgage payment?

Accepted Answer

A full mortgage payment (PITI) includes Principal (loan repayment), Interest (cost of borrowing), Taxes (property taxes), and Insurance (homeowners insurance). You may also have PMI if your down payment is less than 20%, plus HOA fees if applicable.

Question 4

Should I put 20% down on a house?

Accepted Answer

Putting 20% down eliminates private mortgage insurance (PMI), which typically costs 0.5-1% of the loan annually. However, many buyers successfully purchase homes with 3-10% down. The best choice depends on your savings, market conditions, and opportunity cost of tying up cash.

Question 5

How do interest rates affect how much house I can afford?

Accepted Answer

Interest rates significantly impact affordability. A 1% increase in rates reduces buying power by roughly 10%. For example, at 6% you might afford a $400K home, but at 7% the same monthly payment only supports about $360K. Even small rate changes matter over 30 years.

Question 6

What is PMI and when do I need it?

Accepted Answer

Private Mortgage Insurance (PMI) is required by most lenders when your down payment is less than 20% of the home price. PMI typically costs 0.5% to 1.5% of the original loan amount per year. It protects the lender (not you) in case of default, and can be removed once you reach 20% equity.

Question 7

How accurate is this mortgage affordability calculator?

Accepted Answer

This calculator uses standard DTI calculations and industry guidelines to estimate your maximum affordable home price. However, actual approval depends on your credit score, employment history, other assets, and the specific lender's criteria. Use this as a starting point for your home buying journey.

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