"How much house can I afford?" is the most common (and most misunderstood) question in home buying. The answer isn't a number a calculator spits out. It's the full monthly cost of owning the home, compared to what you can comfortably pay every month while keeping reserves for life.
Start with debt-to-income (DTI)
Lenders measure affordability using your debt-to-income ratio, the percentage of your gross monthly income that goes toward debt payments, including your new mortgage. Most conventional programs cap your total DTI (front-end + back-end) at 43 to 50%, depending on the loan and your credit profile. FHA typically allows up to 43% with some exceptions.
- Front-end DTI: Your housing payment (PITI + HOA) ÷ gross monthly income. Ideally under 28%.
- Back-end DTI: All debts (housing + car + student + cards) ÷ gross monthly income. Ideally under 36 to 43%.
Count the full monthly cost
Your mortgage payment isn't just principal and interest. The real number is PITI, principal, interest, taxes, and insurance, plus any HOA and mortgage insurance. Here's how each piece works in Florida:
- Principal & interest: Based on your loan amount, rate, and term (15, 20, or 30 years).
- Property taxes: In Florida, roughly 1.2% of the home's value per year is a reasonable starting estimate, but it varies by county and municipality.
- Homeowners insurance: Florida insurance costs are among the highest in the country. Budget 0.6%+ of home value annually, and expect it to vary by flood zone, roof age, and construction type.
- Mortgage insurance: PMI on conventional loans above 80% LTV; MIP on FHA; guarantee fees on USDA. VA has no monthly MI.
- HOA: If the property is in an association, factor the monthly dues into your total payment.
Our mortgage calculator models every one of these by loan program, so you see the true monthly cost, not just P&I.
Don't forget closing costs
In addition to your down payment, expect closing costs of roughly 2 to 5% of the loan amount, including title insurance, appraisal, origination fees, and prepaid taxes/insurance. You can estimate your cash to close with our Cash-to-Close Estimator. In Florida, some costs (like title insurance) follow state-specific customs for who pays. We'll give you an exact, itemized estimate at pre-approval so there are no surprises.
Keep cash reserves
A common affordability mistake: spending every dollar on down payment and closing. Lenders want to see reserves, typically 2 to 6 months of payments , and you'll want a buffer for the first-year costs every homeowner faces: repairs, furnishing, and the unexpected. Aim to close with at least a few months of payments still in the bank.
Choose the right program for your budget
Your down payment and credit profile determine which programs fit:
- Conventional: 3% down minimum, PMI drops at 80% LTV , best if you have decent credit and want to eliminate mortgage insurance over time.
- FHA: 3.5% down, more lenient on credit, but MIP stays for the life of most FHA loans.
- VA: 0% down, no monthly MI, for eligible veterans and active-duty service members.
- USDA: 0% down in eligible rural and suburban areas , with a modest annual guarantee fee.
The real answer
You can afford a home when the full monthly cost, PITI + HOA + MI, fits comfortably within your DTI limits and you still have reserves after closing. Start with our calculator to model real numbers, then get pre-approved in 24 to 48 hours. We'll tell you exactly what you qualify for, no fluff, no runaround.
