Before you start imagining your perfect breakfast nook or backyard barbecue, it's important to determine a realistic monthly mortgage payment. Of course, you want a place that has all the bells and whistles on your list. But you’ll want to find a home that won't stretch your budget too thin, leaving you scrambling to cover basic needs or unexpected expenses.

Here’s a good rule of thumb: keep your monthly mortgage payment at or below 28% of your gross monthly income. Sticking to this rule helps maintain a healthy financial balance with some wiggle room for life's extras, like dinners, vacations or even starting a new business.

Great question. Your debt-to-income ratio (DTI) shows lenders how much of your income is already committed to other debts, such as car loans or student loans. If your DTI is high, lenders might see you as a risky borrower (it’s nothing personal).

Banks prefer a DTI lower than 36%, with no more than 28% of that debt going towards your mortgage. Keeping your DTI in check not only helps secure a mortgage, but it also ensures you’re not biting off more debt than you can chew.

The 28/36 rule might sound like some sort of complex math problem, but don't worry—it's just a simple way to keep your finances in check. The rule is that no more than 28% of your gross income should go towards housing expenses, and your total debts shouldn't eat up more than 36% of your income. This helps ensure you're not stretching yourself too thin and that you can afford life's ups and downs.

A number of variables will influence the amount of loan you qualify for: income, debts, down payment, credit score, interest rates and even the economy. For instance, beefing up your credit score can help get you a lower interest rate, which may give you more options during your home search for the same monthly payment.

Given the multiple factors at play, calculating how much home you can afford is a great starting point, but it never hurts to speak with a mortgage pro to weigh your options.

This is where the 28/36 rule comes in handy.

Say you’re making $80,000 a year. According to this rule, you'll want to keep your total housing costs—mortgage, property taxes, homeowners insurance and maybe even HOA fees—under $22,400 annually, or about $1,867 per month. This approach will help you keep your finances in order while covering your living expenses, emergencies and those little luxuries you’d rather not live without.

Buying a house is a big step, but it doesn’t have to be a leap into the unknown. By understanding your finances and using tools like our mortgage Affordability Calculator, you can figure out a budget that feels well within reach.

Embarking on the journey to buy your first home is incredibly exciting. It’s a significant step towards achieving one of life's major milestones. The amount you can afford to spend on a house primarily depends on your income, debts, credit score and the down payment you've saved up. A useful guideline is to target a home price that's about 2 to 3 times your annual income.

If you’re a newbie to home buying, you're also in a great position to benefit from first-time homebuyer programs. Some of these programs have great perks, like grants that help cover your down payment and closing costs. It's worth looking into any option that can make your home purchase as smooth and affordable as possible.

When you dive into the world of home buying, understanding how different types of loans can impact your affordability is crucial. Every loan type comes with its own set of rules, interest rates and payment terms, which will all influence how much home you can afford.

How much house can I afford with a Citi HomeRun™ Mortgage?

Considering buying a home but worried about the down payment? The HomeRun™ Mortgage is a Citi-only program that’s designed to make buying a home easier than ever. It’s a fantastic option for those who may not have a large down payment or have a less-than-ideal credit history. With a HomeRun™ Mortgage, you can put down as little as 3%, which is much less than the typical 20% required. Another perk? You won’t have to pay PMI (private mortgage insurance). It’s a great opportunity for people who are ready to take the leap into homeownership but may have faced financial hurdles in the past.

How much house can I afford with an FHA loan?

Backed by the Federal Housing Administration, FHA loans can be secured with as little as 3.5% down and are more forgiving of lower credit scores. Just remember the cost of mortgage insurance premiums, which include an upfront amount that’s usually paid at closing, as well as annual premiums. These costs can affect the total loan amount you're eligible for, so be sure to factor them into your monthly budget.

How much house can I afford with a VA loan?

A VA loan is a special type of mortgage that's available to veterans, active-duty service members and some members of the National Guard and Reserves, as well as eligible surviving spouses. These loans generally don’t require a down payment or private mortgage insurance (PMI). Another bonus? It’s the only loan that allows qualified homeowners to convert up to 100% of their equity into cash.

Unless you’re exempt, VA loans require a one-time funding fee, which can be rolled into your loan amount. This fee varies depending on several factors, including the size of your down payment and whether you’ve used a VA loan before (which could mean a higher fee). Generally, the fee ranges from about 0.5% to 3.6% of the loan amount.

If the house you've got your eye on feels a bit out of reach, don't worry. You can take several steps to make it more affordable over time.

1. Boost your down payment:

Saving for a bigger down payment reduces the amount you need to borrow, which means lower monthly payments. Plus, if you manage to put down 20% or more, you can avoid paying for private mortgage insurance (PMI).

2. See if you qualify for a HomeRun™ Mortgage:

Consider the HomeRun™ Mortgage program, exclusive to Citi, which offers flexible terms and requires a lower down payment, potentially making your dream home more attainable.

3. Polish your credit score:

Your credit score plays a major role in which interest rate you qualify for. A higher score can mean a lower rate, which will save you a lot of money over the life of your loan. To keep your score in good shape, make sure you pay your bills on time, reduce your debt and regularly check your credit report for errors.

4. Look for government assistance:

There are various government-backed programs designed to make home buying more accessible, especially for first-time buyers. These can include tax credits and subsidized loans, which can make a big difference in how much house you can afford.

5. Generate income with your home:

If your dream home comes with extra space, consider renting out part of it to help cover your mortgage and other related expenses.

By implementing these strategies and being realistic about your budget, your mind can rest easy knowing you’re on solid financial ground.