🟨 Step 1: Know What You Can Afford
🔹 What is DTI (Debt-to-Income Ratio)?
Your DTI tells lenders how much of your income goes toward paying debt.
It’s one of the biggest factors in how much house you can afford.
📌 Formula:
DTI = Total Monthly Debt ÷ Gross Monthly Income × 100
🧮 Example:
- Monthly Income: $5,000
- Monthly Debts:
- Car Loan: $500
- Student Loan: $200
- Credit Card: $100
- Total Monthly Debt: $800
DTI = $800 ÷ $5,000 = 0.16 = 16% DTI
✅ A 16% DTI is considered very good. Most lenders want to see a total DTI (including mortgage) under 43%.
💡 What’s a “Good” DTI?
- Under 36%: Excellent — more loan options
- 36–43%: Acceptable, but tighter budgets
- Over 43%: Often too high to qualify, especially with little down payment
🏡 What Can You Afford?
Here’s a general estimate of how income translates into home price range
(based on typical down payment and average interest rates):
| Income | Monthly Mortgage Budget | Estimated Home Price |
|---|---|---|
| $3,500 | $1,000 or less | $150,000 – $180,000 |
| $5,000 | $1,400 – $1,600 | $200,000 – $250,000 |
| $7,000 | $2,000 – $2,300 | $300,000 – $375,000 |
This includes principal, interest, taxes, and insurance — but you should also factor in…
⚠️ Other Costs to Consider in New Orleans:
- Flood Insurance: May be required depending on zone
- Property Taxes: Vary by parish and exemption status
- Homeowner’s Insurance: Cost depends on location and condition
✅ Action Steps:
Start shaping your budget around real-world numbers
Calculate your DTI using the formula above
Check your credit score — aim for 620+
Talk to a local lender to get pre-approved