To understand how much house you can afford, you need to take into account two important factors — what lenders will approve you for and what fits within your budget. The good news is that these budgetary guidelines typically line up. Even so, you will need to make sure you don’t take on more house than you can afford just because the lender is willing to approve a loan for that amount.
Lenders look at a long list of criteria to determine the amount of house they’re willing to approve you for. The list includes things like your current monthly debt payments, your total debt, your income, your credit score, your current assets, how much of a down payment you can make and the current status of the economy.