Buying your first home is exciting, but before you start house hunting, it’s essential to determine how much home you can truly afford. Many buyers assume they can spend whatever they’re pre-approved for, but that’s not always the case.
At Ramon Espinoza Home Loans, we don’t just tell you what you qualify for—we help you understand what fits your lifestyle. Let’s break it down.
Pre-Approval vs. What You Can Afford
Lenders determine how much you qualify for based on your debt-to-income (DTI) ratio, which is the percentage of your gross income that goes toward debt payments. The maximum DTI for most loan programs is around 50%, meaning half your income could go toward your mortgage and debts.
But here’s the catch—lenders don’t factor in your actual living expenses.
Your pre-approval won’t account for:
- Childcare costs
- Travel and entertainment expenses
- Savings goals and retirement contributions
- Medical bills or unexpected expenses
So, even if a lender approves you for a $500,000 home, that doesn’t mean it’s the right number for your budget.
Hidden Costs of Homeownership
Your monthly mortgage payment isn’t just principal and interest—it also includes:
- Property taxes – Can add a few hundred dollars per month
- Homeowners insurance – Varies by location and home type
- HOA fees – Can range from $50 to over $300 per month
- Maintenance costs – Repairs and upkeep aren’t covered in your mortgage
Ignoring these costs can leave you financially stretched. That’s why we help you look beyond just the loan amount.
Income: More Than Just Your Salary
Lenders don’t just look at your base salary—they average your income over two years if you earn:
- Overtime
- Commission
- Tips
- Variable hourly wages
For example, if your paychecks fluctuate—one pay stub shows 40 hours, another shows 32—your lender won’t just use your best paycheck. They’ll average it out, which can lower your qualifying amount.
Your Loan Type and Down Payment Matter
Not all loans are the same, and your loan choice affects how much home you can afford:
- FHA Loans – Easier to qualify for but include mortgage insurance
- VA Loans – No down payment, great for veterans
- USDA Loans – Zero down, but only for rural areas with income limits
- Conventional Loans – Flexible options but higher credit score requirements
If you’re using down payment assistance, your max loan amount may drop slightly due to higher interest rates. For example, if you qualify for $500,000, assistance programs might cap you at $475,000 instead.
How We Help You Find the Right Number
At Ramon Espinoza Home Loans, we go beyond pre-approvals and ask the real questions:
- What’s your actual take-home pay?
- Do you have fluctuating income from commission, tips, or overtime?
- What monthly payment feels comfortable for you, including taxes, insurance, and HOA?
- Are you financially prepared for homeownership beyond just the mortgage?
We don’t just throw out a number—we help you find the number that works for your life.
Your First Home Should Set You Up for Success
Buying a home is a big financial decision—you shouldn’t go in blind. The right home isn’t just about what you qualify for—it’s about what fits your budget and goals.
We don’t say ‘no’; we say ‘how.’ If you’re unsure how much home you can afford, let’s talk. We’ll guide you to a loan that works for your future—not just your lender.
Contact Us Today:
Clemente: clemente@ramonespinozahomeloans.com
Ramon: ramon@ramonespinozahomeloans.com
📍 Se habla Español.
