How Much House Can I Afford in Dallas?

“How much house can I afford?” is the first question almost every buyer asks me, and it is the right one to ask before you start touring homes in Dallas. Here is how lenders actually run the math.

It starts with your debt to income ratio. Lenders look at two numbers: your housing payment compared to your income, and all your monthly debts compared to your income. A common guideline is keeping your housing payment around 28% of your gross monthly income and total debts around 36%, though many loan programs allow higher ratios with strong credit and reserves.

In Dallas, three costs catch buyers off guard:

• Property taxes. Texas has no state income tax, and property taxes carry part of that load. They are a real line item in your monthly payment here, so budget for them honestly.
• Homeowners insurance. Get a quote early. Texas premiums vary widely by area and carrier.
• HOA dues. Many Dallas area communities have them. Lenders count HOA dues in your housing payment.

Your monthly payment is really four pieces: principal and interest, taxes, insurance, and HOA if there is one. When I preapprove a buyer, I run all four so there are no surprises at the closing table.

One more thing. A prequalification is an estimate. A preapproval means your income, assets, and credit were actually reviewed. In a competitive market like Dallas, sellers take preapprovals far more seriously.

If you are buying your first home in Texas, this guide to down payment assistance in Texas could change what you think you can afford.

Want your real number? Start your application and I will run your full picture and give you a price range you can shop with confidence.