Home Affordability: Simple Steps to Find Your Real Budget

If you’re scrolling through listings and wondering "Can I actually afford this?", you’re not alone. The key is to turn vague hopes into hard numbers. Below you’ll get a quick, practical roadmap that works for anyone earning a steady income.

Step 1 – Start with Your Income and Debt

Take your gross yearly pay (the amount before tax) and divide it by 12. That gives you a monthly income number you can work with. Next, list every recurring debt – car loans, student loans, credit‑card minimums, even a personal loan. Add those up.

The debt‑to‑income (DTI) ratio is the magic formula lenders use. It’s simply:

DTI = (Monthly Debt ÷ Monthly Income) × 100%

Most banks like to see your DTI below 36 %. If you’re higher, you’ll need to pay down debt or look for a lower‑cost loan before you start house hunting.

Step 2 – Use a Mortgage Calculator to Get a Rough Figure

Plug your monthly income, DTI, and a realistic interest rate (6‑8 % is common in 2025) into any free online mortgage calculator. Set the loan term to 25‑30 years – that’s the standard in the UK.

The calculator will spit out a maximum loan amount. To turn that into a house price, add your planned down payment. A 20 % deposit is ideal because it keeps monthly payments manageable and avoids extra fees.

Example: If the calculator says you can borrow £150,000 and you can save a 20 % deposit of £30,000, your target house price is roughly £180,000.

Don’t forget other costs: stamp duty, legal fees, moving expenses, and a small cushion for repairs. Adding another 5‑10 % to your budget covers those hidden costs.

Now you have a realistic price range. Anything above it will stretch your budget and could put you at risk of missed payments.

Remember, the goal isn’t just to qualify for a loan – it’s to feel comfortable paying it month after month.

Ready to start hunting? Set your price filter on property sites to the range you just calculated, and focus on homes that match. You’ll save time, avoid disappointment, and move forward with confidence.

Need a quick sanity check? Use the “28/36 rule”: aim for a mortgage payment (including taxes and insurance) that’s no more than 28 % of your gross monthly income, and keep total debt (including mortgage) under 36 %.

That rule, plus the DTI and down‑payment steps, gives you a solid, straight‑forward framework. No fancy jargon, just numbers you can act on.

Take a moment now to pull out a pen, write down your figures, and run the calculator. The clearer your budget, the faster you’ll find a home that truly fits your life.