I make $65,000 a year. How much will be approved for the mortgage?

With an annual salary of $65,000, you may be able to afford a Federal Housing Administration (FHA) loan of $260,200 with the home costing up to $265,000.

These calculations are based on an assumed 7% interest rate, a 3.5% down payment, a 1.75% upfront mortgage insurance payment, and favorable factors such as a good credit score, low debts, and a total debt-to-income ratio of 50%.

In general, mortgage lenders tend to approve borrowers who allocate 40% of their gross income towards the home loan, leaving 10% for other debts.

As you see, there are various factors apart from the principal and interest rates for your loan that decide how much house you can afford including additional costs like closing costs, insurance, taxes, etc. Paying off some of your existing debt — even as much as $500 a month — could increase the value of the home you can purchase by $70,000. Consult with your lender, mortgage broker or financial advisor to decide whether and what type of mortgage suits you best.