Estimating Your Buying Power (Without the Stress)

Andrew Georgitsis
Jul 25
2 min read

💰 Estimating Your Buying Power (Without the Stress)You don’t need a finance degree to figure out what kind of home you can afford. Let’s make it simple.

🧠 First, What Is “Buying Power”?

Your buying power is how much home you can afford based on:

Your income
Your debts
Your credit score
Your down payment
Current interest rates

Think of it as your realistic price range, not your dream budget.

🧮 Quick Buying Power Formula (Rule of Thumb)

Most lenders recommend keeping your monthly housing payment at or below 28–30% of your gross income.

Here’s a ballpark formula:

Monthly Income x 0.28 = Max Monthly Mortgage Payment

Example:If you make $7,000/month:$7,000 × 0.28 = $1,960/month mortgage budget

This would likely support a home price of around $400,000–$450,000 depending on interest rates, taxes, and insurance.

📉 What Else Affects Buying Power?

Down payment: The more you put down, the more you can afford
Debt-to-income (DTI) ratio: Lenders prefer DTI under 43%
Interest rates: Higher rates = higher payments = lower buying power
Loan type: FHA, VA, or Conventional loans all come with different requirements

💡 A lender can help you figure this out exactly—no obligation, just clarity.