Buying your first home is one of the most exciting — and most financially consequential — decisions you’ll make. I work with first-time buyers regularly, and the question I hear most often isn’t “How much will the bank lend me?” It’s “How much home can I actually afford without stretching myself too thin?” Those are very different questions, and I want to help you answer the right one.

Start with Your Net Income, Not Your Gross

Your gross income — what you earn before taxes and deductions — is what lenders use to qualify you. But your net income — what actually hits your bank account after taxes, retirement contributions, and other withholdings — is what you actually have to spend. I always ask clients to build their home budget starting from net income so we’re working with real numbers.

The 28/36 Rule: A Starting Point

The 28/36 rule is a widely used guideline I explain to every home-buying client:

• 28% rule (front-end): Your total monthly housing costs — mortgage principal and interest, property taxes, and homeowners insurance — should not exceed 28% of your gross monthly income.
• 36% rule (back-end): Your total monthly debt obligations — housing plus car loans, student loans, credit cards, and all other debt payments — should not exceed 36% of your gross monthly income.

These are starting points, not hard limits. I help clients think about what payment feels genuinely comfortable given their full financial picture, not just what a lender will approve.

Key Questions I Ask Every First-Time Buyer

• How much do you have for a down payment? This affects your loan amount, your interest rate, and whether you’ll owe PMI. I generally recommend at least 10% down if possible, and 20% to avoid PMI.
• What are your closing costs? In Texas, closing costs typically run 2–5% of the purchase price. Make sure you have this cash available separately from your down payment.
• Do you have an emergency fund? Don’t drain your savings to buy a house. Homeownership comes with surprise expenses — a roof, an HVAC system, a water heater. I want clients to have 3–6 months of expenses in reserve even after closing.
• Can you afford the earnest money deposit? This is typically 1–2% of the purchase price, paid upfront to secure the property. It’s applied to your down payment at closing but is at risk if you back out without a valid contingency.

Trust Your Own Judgment — Not Just the Lender’s

I tell every client: just because a lender will approve you for $400,000 doesn’t mean a $400,000 mortgage is right for you. Lenders are evaluating their risk, not your lifestyle, your retirement goals, or your desire to travel, save for college, or sleep soundly at night. You know your situation better than any underwriting formula does.

Calculate How Much Home You Can Comfortably Afford

USE THE HOME AFFORDABILITY CALCULATOR.