08/28/2026
"Just because you qualify for it doesn’t mean you should SPEND it!"
FIRST-TIME BUYERS, this message is for you! One of the biggest mistakes first-time buyers make is confusing the loan qualification with TRUE affordability. That is why who you hire as your Realtor is extremely important. Here’s a simple way to think about it:
The 28% Guideline
Ideally, your monthly housing payment should be around 28% or less of your GROSS monthly income. Gross income, meaning before taxes are taken out. Monthly payment includes:
🏡 Principal
💵 Interest
🏛️ Property taxes
🛡️ Homeowners insurance
➕ HOA dues, if applicable
The 36% Guideline
Ideally, your housing payment plus your other monthly debts should be around 36% or less of your gross income.
Example:
🚗 Car payments
🎓 Student loans
💳 Credit card minimums
💰 Personal loans
AND 🏡 Monthly Mortgage payment
But here’s where it gets interesting…
A lender may approve you at a higher debt-to-income ratio, depending on your type of loan and financial picture. So you might hear, “You qualify for this much.” But the more important question is, what payment can you comfortably afford every month?”
Can you still save?
Can you travel?
Can you handle an unexpected expense?
Can you enjoy dinner out without stressing about your mortgage?
Example: Let's say a buyer earns $8,000/month gross.
A lender allows a 45% DTI (Debt to income ratio)
45% × $8,000 = $3,600
That means the buyer's total monthly debt payments cannot exceed $3,600. Suppose you already have:
Car payment: $500
Student loan: $300
Credit cards: $200
Total existing debt = $1,000
The lender subtracts that from the maximum allowed debt:
$3,600 − $1,000 = $2,600
So the buyer could qualify for a housing payment of about $2,600/month. Notice how that compares to the 28% guideline:
28% guideline: $2,240 housing payment
45% DTI qualification: $2,600 housing payment
The lender says, "You qualify." The budgeting guideline says, "You might be more comfortable closer to $2,240." One of our favorite ways to explain it:
Your lender determines what you can qualify for. However, your budget determines what you can comfortably live with. Buying your first home should be exciting, not leave you feeling house poor.
If you’re thinking about buying your first home, let’s get you connected with a trusted lender for a no cost consultation.
