Determining how much “home you can afford” depends on several important factors including:

• Your annual gross income. You can get a very rough estimate of your affordable home price range by multiplying your annual gross income by 2.5 to 3. If you earn $50,000 per year, you might afford a home in the $125,000–$150,000 range. Keep in mind this is only a starting point—actual affordability depends on current interest rates, your existing debt, and your credit profile..
• Your credit history and score. Your credit can affect your ability to qualify for a mortgage and your mortgage rate. Before you shop for a house or a mortgage, find out what your credit score is by visiting www.annualcreditreport.com or calling (877) 322-8228. Be sure to do this only once a year because your score can be negatively affected if pulled too often.
• Current mortgage rates. Mortgage interest rates change frequently, often daily, in response to broader economic conditions and investor demand. One major player in this market is Freddie Mac, a government-sponsored enterprise that buys mortgages from lenders. Investor activity related to Freddie Mac and similar institutions can significantly affect mortgage demand—and, by extension, rates.To stay informed, check: https://www.freddiemac.com/pmms. This weekly report provides average mortgage rates nationwide for: 30-year fixed-rate loans, 15-year fixed-rate loans, 5/1 adjustable-rate mortgages (ARMs). Tip: Even a small rate increase—say, from 6.25% to 6.75%—can raise your monthly payment by hundreds of dollars over the life of the loan.
• The amount of your down payment. You will have to make a down payment of at least 5 percent of the home purchase price to qualify for a mortgage that meets Freddie Mac’s requirements. If you are able to put down 20 percent or more, you can avoid having to pay private mortgage insurance (PMI), reducing your monthly mortgage payment. Jumbo loans most often require 20% down. For high-cost homes that exceed conventional loan limits, a jumbo loan is required. As of 2025, a mortgage is generally considered a jumbo loan if it exceeds $806,500 for a single-family home in most areas.
• The type of home you are purchasing. If you are looking to buy a condominium/townhome, keep in mind that rates are typically higher for these loans and you’ll have to budget for the cost of your monthly condominium/townhome (HOA) fee. HOA fees can range from $100 to $1,000+ per month, depending on the property and location, so be sure to factor this into your monthly budget.
• Your current lifestyle and future plans. You should consider your current living standards, as well as any future major expenses such as a wedding or college tuition. And, remember – buy what you can comfortably afford today, not five years from now.
• Fees and closing costs. Remember to factor in the expenses and fees you will incur for a home appraisal, a home inspection and other professional services required to buy a home.