Financing guide
How much house you can afford
How much house you can afford is set by three numbers: your gross income, your existing debt payments, and the mortgage rate you can qualify for. Lenders apply a debt-to-income limit to those figures and derive a maximum payment, then work back to a loan amount. The published rate average moves that ceiling every week. The lowest rates are only available to the most qualified applicants.
The three inputs
Gross monthly income, existing monthly debt payments, and the mortgage rate. Lenders convert the first two into a ratio and compare it with a limit, then use the rate to turn the permitted payment into a loan amount.
Every one of those inputs is knowable before you speak to a lender. The rate is the only one that moves with the market, and Freddie Mac publishes it weekly, which makes the ceiling a moving target rather than a fixed number.
| Week | 30-year fixed | 15-year fixed |
|---|---|---|
| 9/17/2026 | 6.95% | 6.26% |
| 9/10/2026 | 6.76% | 6.09% |
| 9/3/2026 | 6.71% | 6.04% |
| 8/27/2026 | 6.66% | 5.98% |
| 8/20/2026 | 6.65% | 5.95% |
| 8/13/2026 | 6.67% | 5.96% |
Source: Freddie Mac Primary Mortgage Market Survey, published at freddiemac.com/pmms. These are national averages for conforming loans. What you are quoted depends on your credit profile, points paid, loan amount and property.
The published rate backdrop
Freddie Mac publishes the national average mortgage rate every week, and the table above shows the latest six readings. The rate is the yardstick a lender uses to price a conforming loan, and it moves the affordable amount more than most buyers expect.
A quarter-point change on a large balance moves the monthly payment by a meaningful amount, which moves the loan amount the same payment supports. That is why the same income buys a different house in different months.
Front-end and back-end ratios
The front-end ratio is the mortgage payment divided by gross monthly income. The back-end ratio adds every other debt payment to the mortgage and divides the total by the same income. Both are usually expressed as percentages.
Lenders set their own limits, and they weigh credit history, employment and cash reserves alongside the ratios. The ratios are a starting filter, not the whole decision, and a strong file can stretch them.
What counts as a debt payment
Car loans, student loans, minimum credit card payments and any other instalment debt count. Rent usually does not count once you buy, but a current mortgage does, and so does any support obligation the lender recognises.
Estimate the minimum payment on each account rather than the amount you actually pay. A lender uses the contractual minimum, and overpaying an account does not reduce the debt it sees in the ratio.
The down payment changes the ceiling
A larger down payment lowers the loan amount and can lower the rate, and it may remove the need for mortgage insurance. All three effects raise the price of the house the same income can support.
A smaller down payment raises the loan and the payment, and it can add an insurance premium. That premium is a real monthly cost that the affordability test must include, not an afterthought.
Property tax, insurance and fees
Property tax, homeowners insurance and any association fees sit on top of principal and interest. Lenders often collect them in an escrow account, so the payment you make each month includes them.
Ask for the tax figure for the specific property, not a national average. Tax rates vary widely between jurisdictions, and the difference can change the affordable price by a large margin.
Why the pre-approval amount is not the budget
A pre-approval states what a lender will lend, not what you should spend. The maximum leaves no room for a repair, a rate change or a lost income, and it assumes the ratios are the only constraint on the household.
Treat the pre-approval as a ceiling and set your own budget below it. The difference is the buffer that keeps a housing payment survivable in a bad year, which is when it matters most.
The cost of buying at the maximum
Buying at the maximum ties the largest possible share of income to housing. A small income change then becomes a crisis, because the payment has no slack and the other costs of ownership keep arriving.
The same money spent below the maximum leaves room for maintenance, which is a real cost of ownership that renters do not pay. A furnace, a roof or a plumbing failure arrives without warning and cannot be deferred.
How to run the test yourself
Take gross monthly income, subtract existing debt payments, and apply a debt-to-income limit. Turn the permitted payment into a loan amount using the rate in the table, then add the down payment to get the price.
Run the affordability calculator on this site to do the arithmetic, then compare the result with a lender's pre-approval. A wide gap means one of the inputs differs, and it is worth finding out which.
What to do when the number is too low
If the number is too low, the levers are a larger down payment, a lower rate, a smaller other-debt load, or a lower price. Paying down an instalment debt raises the affordable amount because it frees ratio room.
Improving the credit file can lower the rate, which raises the affordable amount without changing income. That is often the highest-return step available before shopping, and it costs time rather than money.
A worked example
A household with $7,000 gross monthly income and $600 of debt payments, at a 36% back-end limit, can carry about $1,920 in total debt service. Subtract the $600 and the mortgage payment ceiling is roughly $1,320 before taxes and insurance.
At the published average rate over thirty years, that payment supports a loan in the low $200,000s, before the down payment. Every input changes the answer, so run the arithmetic with your own numbers rather than this example.