How Much House Can You Afford in 2025?

Figuring out how much house you can afford is more than a single calculation — it involves understanding your income, debts, down payment, expected interest rate, and future costs such as taxes and insurance. In 2025, with fluctuating rates and changing markets, use a practical approach to estimate a realistic buying range.

Step 1: Calculate your monthly income and debts

Start with your gross monthly income (before taxes). Next, list fixed monthly debts: car loans, student loans, minimum credit card payments, and other obligations. Lenders evaluate your debt-to-income (DTI) ratio — a conservative target is a housing payment under 28–30% of gross income and total DTI under 36–45%.

Step 2: Estimate a conservative monthly housing budget

Multiply your gross monthly income by 0.28–0.30 to find a target housing payment. Remember this must cover principal, interest, property taxes, homeowner's insurance, and possibly HOA fees. Use our mortgage calculator to test back-of-envelope purchase prices that fit this monthly payment.

Step 3: Factor in down payment and closing costs

A larger down payment reduces the loan amount and monthly payment. Plan for closing costs (typically 2–5% of purchase price) and maintain cash reserves for emergencies. In 2025, competitive buyers may need higher down payments in some markets to improve bids.

Step 4: Try scenarios

Use different interest rates (current market, higher-stress rates) and term lengths (30-year vs 15-year) in the calculator to see how payments change. If you have variable income, choose the lower end of affordability to avoid strain.

Practical example

If your gross monthly income is $7,500, a conservative housing budget at 30% gives a target payment of $2,250. At a 4.5% interest rate with 20% down, that may correspond to a purchase price in the $350k–$450k range (varies by taxes/insurance). Use the calculator to plug in exact numbers for your area.

Final advice

Get pre-approved to understand the lender's view, but keep a personal buffer. Market conditions change; plan for unexpected expenses and avoid maxing out affordability. Use this calculator to test realistic scenarios and pick a comfortable price range.

Return to the calculator to experiment with numbers and find the exact mortgage payment for your situation.