How much house can I afford — really?
There are two different numbers, and confusing them is how people end up house-poor: what a lender will approve, and what your budget can absorb. The famous 28/36 rule is a budgeting guideline, not an underwriting limit — lenders qualify you on debt-to-income ratios that run far higher: conventional loans can be approved up to roughly 50% back-end DTI with automated-underwriting approval, FHA automated approvals routinely clear its 31/43 baseline benchmarks in strong files, and VA loans use a residual-income test rather than a hard DTI cap. An approval near those ceilings is real money you can borrow and a payment you may hate living with; the affordability question is yours to answer, not the underwriter’s.
Last reviewed 2026-08-24
| Key number | Value | Source |
|---|---|---|
| Conventional maximum DTI with automated-underwriting approval | up to 50% back-end | Fannie Mae Selling Guide B3-6-02 |
| VA qualification method | residual-income test; no fixed DTI cap | VA Lenders Handbook |
Front-end vs back-end DTI in plain English
Front-end DTI is the full monthly housing cost — principal, interest, property taxes, insurance, HOA dues, and mortgage insurance — divided by gross monthly income. Back-end DTI takes that same housing number and adds every other monthly debt payment: car loans, student loans, card minimums, personal loans, support obligations. Front-end is just the house; back-end is the house plus everything else. Lender limits usually bind on the back-end number, but programs that also cap the front-end can kill a deal the back-end alone would pass.
The actual limits, by loan type
Conventional (Fannie/Freddie): automated underwriting can approve back-end DTI up to roughly 50% with compensating strength in credit, reserves, or down payment. FHA: the baseline benchmarks are 31% front-end and 43% back-end; automated (TOTAL Scorecard) approvals routinely clear well above them in strong files, while manually underwritten loans with compensating factors top out at 40% front / 50% back. VA: no fixed DTI ceiling — qualification hinges on residual income, the dollars left after housing and debts, which is why unusually high DTIs sometimes clear on VA loans. These ceilings exist to accommodate edge cases; they are not targets.
Why calculators disagree with your gut — both are answering differently
Online affordability calculators generally mirror lender math: gross income and approval-limit DTIs. Your gut runs on take-home pay, retirement contributions, childcare, and the vacation you want to keep taking — none of which underwriting sees. Both are answering real questions; they are just different questions. The practical move is to compute both numbers — the approval ceiling and the payment your after-tax budget absorbs without strain — and shop to the lower one.
What actually moves your qualifying number
Gross income and how it documents (self-employed borrowers are typically averaged over two years of returns); every monthly debt payment, where a $400 car payment can subtract tens of thousands from the price you qualify for; credit score, which drives the rate that drives the payment; down payment size; and the property’s own taxes, insurance, and HOA — two identical incomes qualify for very different homes in a high-tax county versus a low-tax one. That last input is local, which is why affordability is a per-property question, not just a per-borrower one. Ralo’s city affordability index
The gap to respect
The distance between "approved" and "comfortable" is where house-poverty lives. A useful private test: take the target payment, add realistic utilities and maintenance, and pretend to pay it for two or three months while still renting — banking the difference. If the trial squeeze hurts, the approval ceiling is not your number. Ralo — an automated mortgage broker, not a lender — shows the full payment including taxes and insurance on its illustrative quotes precisely because principal-and-interest alone understates the real commitment.
Ralo is an automated mortgage broker — not a lender — that compares multiple lenders from one application, earns a thin commission, and shows rate, APR, and fees upfront. Rates shown anywhere on this site are illustrative examples, not a loan approval, rate lock, or commitment. Available where licensed: California, Colorado, and Texas.