How Much House Can I Afford? A Step-by-Step Guide for Addison Homebuyers

If you're asking, “How much house can I afford?” you're already making a smart move. For first-time buyers in Addison or families upgrading in North Dallas, knowing your financial boundaries upfront empowers you to act confidently in a competitive real estate market.

1. Use the 28/36 Rule to Estimate Affordability

Mortgage lenders often rely on the 28/36 rule: 28% of your gross monthly income = maximum housing expenses, and 36% = total allowable debt (housing plus other debt). For example, if your income is $6,000/month, max housing would be $1,680, and total debts should not exceed $2,160.

2. What Determines How Much House You Can Afford?

When the Velocity Team reviews your application, here’s what we consider: income stability and employment, credit score and history, debt-to-income (DTI) ratio, down payment amount, and loan program eligibility (FHA, VA, USDA, Conventional).

3. Quick Affordability Formula

For a rough estimate, use this formula: Affordable Home Price ≈ Annual Gross Income × 2.5 to 3. Even better, use our free mortgage calculator or contact us to get prequalified with more accurate numbers based on your financial picture.

4. Don’t Forget Addison-Specific Costs

Buying in Addison, TX comes with some local considerations: Dallas County property taxes, homeowners' insurance premiums, HOA fees if applicable, and average utility and maintenance costs. The Velocity Team is based right here in Addison — we know the numbers and can guide you accordingly.

5. Find the Right Mortgage Program for You

We’ll help match you to the best-fit loan: FHA Loans for low down payments and first-time buyers, VA Loans with no down payment for eligible veterans, USDA Loans for qualifying rural/suburban buyers, and Conventional Loans with competitive rates and flexible terms.

Ready to See What You Can Afford?

There’s no pressure — just clarity. Local to Addison, TX, we’ve helped hundreds of families navigate their journey to homeownership. Book a Free Consultation or Get Prequalified with the Velocity Team today.

FAQ: How Much House Can I Afford?

Q: Can I buy a home in Texas with a low credit score? A: Possibly. FHA loans start at 580+ credit scores, though better scores mean lower rates.

Q: Do I need 20% down to buy a house? 

A: Not anymore, many programs allow as little as 3% down.

Q: What’s included in a mortgage payment? 

A: Principal, interest, property taxes, homeowners insurance, and sometimes HOA dues.