A lender does not approve you for a house price. It approves you for a monthly payment, and the price is whatever that payment buys at today's rate, taxes and insurance. So the honest answer to "how much house can I afford" starts with your gross monthly income, your monthly debts, and the full payment on the home, not the sticker on the listing.
Online calculators get this wrong in a predictable way: they show principal and interest and leave out half the payment. In Arizona, the half they leave out is often the half that surprises people.
The payment a lender actually counts
Underwriting looks at the full housing payment, usually written PITI plus:
- Principal and interest on the loan.
- Property taxes, monthly. Arizona taxes are moderate by national standards, but new construction is a trap here: the first bill is often based on land value alone, and the real bill arrives a year later. See Arizona Property Taxes for Home Buyers.
- Homeowners insurance, monthly.
- Mortgage insurance, if your down payment is under 20% on a conventional loan, or on almost any FHA loan.
- HOA dues. In Scottsdale, Gilbert and much of the East Valley these are real money, and in golf and club communities they can rival a car payment.
Two houses at the same price can carry very different payments because of the last three lines. That is why I quote buyers a payment range, not a price range.
The ratio that sets your ceiling
Lenders divide your monthly debts by your gross monthly income. That is your debt-to-income ratio, and it is the number that actually caps your price.
- The total ratio counts the new housing payment plus every monthly debt on your credit report: car loans, student loans, minimum card payments, personal loans, child support.
- It does not count utilities, phone, groceries, insurance on your car, or daycare.
Automated underwriting on conventional loans can approve total ratios into the high 40s, and in some files up to 50%, when credit, reserves and down payment support it. FHA can go higher with strong compensating factors. A weak file gets a lower ceiling. The full mechanics are in Debt-to-Income Ratio Explained.
Run your own number in four steps
- Take your gross monthly income. Before taxes. If you are salaried, annual divided by twelve. If you are hourly, commissioned, bonused or self-employed, it is more complicated, and the lender's number may be lower than yours.
- Multiply by 0.45. That is a reasonable working ceiling for total debt on a solid conventional file. Not a promise, a planning number.
- Subtract your current monthly debts from your credit report.
- What remains is your maximum housing payment, all in: taxes, insurance, mortgage insurance and HOA included.
Example: a household earning $9,000 a month gross with $650 in car and student loan payments. Times 0.45 is $4,050. Minus $650 leaves about $3,400 for the whole housing payment. Then work backward through taxes, insurance and HOA to the loan amount that payment supports at current pricing.
Approved is not the same as comfortable
The lender's ceiling is the most you can borrow, not what you should spend. Underwriting does not know about your private school tuition, your retirement contributions, or the fact that you like to travel. A good test is to live on the proposed payment for three months before you buy: bank the difference between your rent and the new payment and see whether it hurts.
The families I see struggle are almost never the ones who bought a smaller house than they qualified for.
The levers that move your number
If the number is short, here is what actually moves it, in rough order of speed:
- Pay off or pay down a monthly debt. Clearing a car payment frees room immediately. Paying down a card lowers its minimum payment.
- Add a co-borrower's income. See Co-Signer vs Non-Occupant Co-Borrower.
- Choose a lower HOA or lower tax area. Same price, bigger loan.
- Buy down the rate permanently. A temporary buydown does not help qualifying on most programs because you qualify at the note rate. See Permanent vs Temporary Buydown.
- Change the program. FHA, VA and some specialty programs treat ratios and debts differently.
Get the real number before you shop
A calculator gives you a guess. A lender who has actually read your pay stubs, W-2s or returns, and run your credit, gives you a number you can write an offer on. That is the difference between prequalification and an underwritten preapproval, and in a competitive Phoenix market it decides whose offer gets accepted.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out which program actually costs you less
FHA, conventional and jumbo price the same borrower very differently once the mortgage insurance is compared across the years you will own the home. Tell me the shape of your file and I will run them side by side.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
