A lender will tell you the maximum you can borrow. That number is not the same as what you should borrow.
Lenders qualify buyers up to 43%–50% of gross income in total debt obligations. The payment they approve you for can consume so much of your monthly income that an unexpected car repair or medical bill destabilizes your finances. The 28% housing expense guideline exists precisely because a payment at that level leaves room for the rest of your financial life.
The math in this guide uses 28% as the comfortable standard. Where lender limits diverge from that standard — and why it matters — is covered directly.
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Your number at a glance: Divide your gross annual income by 12. Multiply by 0.28. That is your comfortable maximum monthly PITI (principal, interest, taxes, and insurance combined). At $130K: $130,000 / 12 × 0.28 = $3,033/month. At $100K: $2,333/month. At $150K: $3,500/month. Your actual qualifying payment depends on your existing debt obligations — covered in the debt trap section below. |
Mortgage qualification uses two separate income ratios. Both must pass. The first limits your housing cost relative to income. The second limits your total debt. For buyers with minimal existing debt, the first test is the binding constraint. For buyers with car payments, student loans, or credit card minimums, the second test often becomes the binding constraint.
Monthly PITI — principal, interest, property taxes, and homeowner’s insurance — should not exceed 28% of gross monthly income on conventional loans. FHA guidelines allow up to 31%–33%. The CFPB’s mortgage resource center explains how lenders evaluate housing expense ratios. The 28% figure is not a regulatory ceiling; it is the threshold below which housing costs don’t typically crowd out other budget priorities.
Total DTI measures all monthly debt obligations — proposed PITI plus every existing recurring payment — as a percentage of gross monthly income. Conventional loans typically allow total DTI up to 43%. FHA allows up to 50%–57% in specific scenarios. The difference between 28% for housing and 43% total DTI is the room available for existing debt.
The practical consequence: every dollar of existing monthly debt reduces your available housing budget by the same dollar. A $400/month car payment doesn’t compete with your mortgage in some hypothetical future — it competes with it today, at the qualification stage.
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“Lenders approve what regulations allow. The 28% guideline recommends what financial stability suggests. These are different numbers, and borrowing to the lender’s limit while ignoring the guideline is how buyers end up house-poor.” |
All calculations use Freddie Mac’s 30-year rate of 6.53% (May 28, 2026), Colorado’s property tax rate of 0.51% of assessed value, homeowner’s insurance at 0.4% of purchase price annually, and conventional PMI at 0.7% of loan annually (for 5% down). Assumes no existing monthly debt obligations — see the debt trap section for how existing payments change these numbers.
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Household Income |
Comfortable PITI (28%) |
Max Price¹ |
P+I Payment |
5% Down Payment |
Where This Opens Doors in Denver |
|---|---|---|---|---|---|
|
$70,000 |
$1,633 |
$223,000 |
$1,341 |
$11,150 |
FHA possible; outer suburbs, Pueblo; CHFA DPA programs available at 620+ |
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$80,000 |
$1,867 |
$254,000 |
$1,533 |
$12,700 |
Commerce City, Brighton, Federal Heights; some attached Denver units |
|
$90,000 |
$2,100 |
$286,000 |
$1,724 |
$14,300 |
Aurora outer, Thornton, Northglenn; FHA + DPA is the efficient path here |
|
$100,000 |
$2,333 |
$318,000 |
$1,916 |
$15,900 |
Thornton, Westminster outer, Lakewood outer; CHFA DPA often applicable |
|
$110,000 |
$2,567 |
$350,000 |
$2,107 |
$17,500 |
Aurora metro, Westminster, Lakewood; full CHFA program range available |
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$120,000 |
$2,800 |
$382,000 |
$2,299 |
$19,100 |
Outer Denver neighborhoods, most of metro suburbs; strong position |
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$130,000 |
$3,033 |
$413,000 |
$2,491 |
$20,650 |
Wider Denver and suburban ring; approaching first-tier Denver inventory |
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$150,000 |
$3,500 |
$477,000 |
$2,874 |
$23,850 |
Central Denver neighborhoods; most suburban markets comfortably |
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$175,000 |
$4,083 |
$557,000 |
$3,353 |
$27,850 |
Denver core neighborhoods; approaching median; Park Hill, East Colfax |
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$200,000 |
$4,667 |
$636,000 |
$3,832 |
$31,800 |
Denver median and above; Washington Park adjacent; full market access |
¹Max price calculated at 28% PITI and 5% down. Actual qualifying price depends on credit score (affects rate), existing debt (affects DTI), and lender-specific underwriting. Prices rounded to nearest $1,000.
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Colorado median household income is $87,900 (U.S. Census Bureau). At $87,900 and 6.53% rate, comfortable PITI is $2,050/month and comfortable price is approximately $279,000–$285,000. Denver’s median home price is approximately $610,000 (Redfin, April 2026). This $325,000 gap is the structural affordability challenge that makes DPA programs, assumable mortgages, and geographic flexibility the most important variables in Denver homebuying right now. |
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Go Deeper: How Much Income Do You Need to Buy in Denver? | What If I Make Too Much for Assistance but Not Enough for Denver? |
The debt trap is the most expensive thing most buyers never calculate before they start shopping. At $130,000 household income, the comfortable PITI is $3,033. But the 36% total DTI ceiling is $3,900. That $867 gap is what’s available for existing debt before housing even begins to be constrained. Once existing debt exceeds $867/month, it starts eating into the housing budget — dollar for dollar.
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Existing Monthly Debt Payments |
Max PITI Available for Housing |
Max Purchase Price |
What It Means |
|---|---|---|---|
|
$0/month existing debt |
$3,033 |
$413,000 |
Baseline — no existing obligations consuming DTI headroom |
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$300/month (small car payment) |
$2,900 |
$395,000 |
$18,000 less buying power. A modest payment has a compounding effect on qualifying price. |
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$600/month (average car payment) |
$2,767 |
$377,000 |
$36,000 less. Average US car payment of $565–$710 reduces Denver buying power by a full price tier. |
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$1,000/month (car + student loans) |
$2,567 |
$350,000 |
$63,000 less. One car payment plus standard student loan minimums drops the buyer from Aurora to outer Commerce City territory. |
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$1,500/month (high debt load) |
$2,133 |
$291,000 |
$122,000 less. At this debt level, buying power is cut nearly in third. The home is significantly constrained. |
Ask your lender to run the “payoff model.” This means: given your current debt load, which specific debt payoff moves your qualifying price most per dollar spent? A $500/month car payment eliminated at a $20,000 payoff restores $500/month to your housing budget — which increases qualifying price by approximately $68,000. The math is favorable for most buyers carrying medium-sized installment debt.
The tricky category is student loans. Income-driven repayment plans show a low monthly payment on the credit report — but some lenders use 0.5%–1% of the outstanding balance per month as the assumed payment even if your actual payment is lower. Confirm with your lender how they calculate student loan payments in the DTI.
Most buyers focus on the payment. The rate determines what that payment buys. This table fixes the monthly P+I at $2,800 and shows the loan amount — and purchase price — that payment supports at each rate. The range is not hypothetical: every rate in this table is accessible through a specific path.
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Rate |
Loan Amount |
Purchase Price (5% down) |
Monthly P+I |
How to Access This Rate |
|---|---|---|---|---|
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3.0% |
$664,130 |
$699,000 (5% down) |
$2,800 |
Assumable FHA/VA loan from 2020–2022. Access through Gravvity’s seller network. |
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4.0% |
$586,491 |
$617,000 (5% down) |
$2,800 |
Some 2022–2023 loans; above market but still accessible on the right property. |
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5.0% |
$521,589 |
$549,000 (5% down) |
$2,800 |
Not available in the current new-origination market; only via assumption. |
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6.0% |
$467,017 |
$491,000 (5% down) |
$2,800 |
Below current market; may appear from lenders competing for volume. |
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6.53% |
$441,611 |
$464,000 (5% down) |
$2,800 |
Current Freddie Mac benchmark, May 2026. Baseline for new originations. |
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7.0% |
$420,861 |
$443,000 (5% down) |
$2,800 |
Above-market rate tier; some NON-QM and some seller financing. |
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8.0% |
$381,594 |
$401,000 (5% down) |
$2,800 |
Common seller financing rate. On same payment, $222K less purchasing power than 3%. |
The $2,800/month P+I payment buys a $664,000 loan at 3.0% or a $382,000 loan at 8.0%. The $282,000 difference in loan amount — from identical monthly payments — is the value of rate access. A buyer who identifies a seller with an assumable FHA or VA loan from 2020–2022 at 3.0% can buy $282,000 more home for the same monthly cost as a buyer entering a new conventional loan at 8.0%.
This is not an academic exercise. It explains why assumable mortgages are among the most financially significant opportunities in Colorado’s current market — and why the rate on a loan matters more than the purchase price for monthly payment management.
The payment your lender quotes is PITI: principal, interest, taxes, and insurance. It does not include mortgage insurance if you’re below 20% down, HOA dues if applicable, or ongoing maintenance. The gap between the quoted payment and the true monthly cost of homeownership is what catches buyers off guard in year two.
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Cost Item |
Monthly at $400K |
Type |
Notes |
|---|---|---|---|
|
Principal + interest |
$2,491 |
Calculated |
This is the number your lender quotes. It assumes a 30-year term and your negotiated rate. |
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Property taxes (CO rate ~0.51%) |
$175 |
Fixed (property-based) |
Colorado’s 0.51% rate is among the lowest in the US. In Texas this would be $567 on the same property. |
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Homeowner’s insurance |
$133 |
Fixed (annual premium) |
Based on $400K home, approximately $1,600/year. Varies with coverage level, age of home, and location. |
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Mortgage insurance (PMI at 5% down) |
$222 |
Cancels at 20% equity |
At $400K with 5% down: $380K loan × 0.7%/12 = $222. Removed when you reach $320K loan balance. |
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HOA dues (if applicable) |
$0–$500 |
Varies widely |
Condos and many Denver townhomes have HOAs of $200–$500/month. This directly reduces what you can afford to spend on price. |
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Maintenance reserve |
$333 |
1% of price/year |
Industry standard: budget 1% of home value annually for maintenance. Not collected at closing; your budget item. |
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TOTAL PITI (without maintenance) |
$3,021 |
Lender’s reference |
This is what qualifies you. Does not include maintenance or utilities. |
|
TOTAL true monthly cost (with reserve) |
$3,354 |
Actual budget line |
What homeownership actually costs at $400K. The number that matters for your financial planning. |
Budget 1% of your home’s value annually for maintenance — $4,000/year on a $400,000 home, or $333/month. This is not a fee you pay; it is a reserve you build. Some years cost nothing. Some years cost $8,000 (roof). The 1% average holds over time. Buyers who don’t account for this are perpetually surprised by costs that are entirely predictable.
For a newer home (under 10 years old), 0.5%–0.75% may be realistic. For an older Denver home (pre-1980), 1.25%–1.5% is more conservative and more accurate. The age of the property’s major systems — roof, HVAC, plumbing, electrical — determines the realistic maintenance reserve, not the cosmetic condition.
Denver condos and townhomes frequently carry HOA dues of $200–$500/month. These are not included in the PITI your lender quotes, but they are included in the DTI calculation. A $400/month HOA on a property you’re considering reduces your available housing budget by $400 — exactly as a car payment would. Evaluate HOA dues before falling in love with a property, not after.
Lenders can qualify buyers at 43%–50% total DTI. At $130,000 income, 43% DTI is $4,658/month in total debt. If existing debt is $600/month, available PITI at 43% is $4,058/month — significantly above the 28% comfortable threshold of $3,033.
The difference between $4,058 and $3,033 is $1,025/month of monthly cash that goes toward housing instead of savings, retirement, or financial resilience. Over five years, that’s $61,500. The lender will approve you for the larger amount. The lender will not help you navigate the financial consequences of using it.
The buyer who targets 28% instead of 43% buys a smaller home today and a stronger financial position every month after closing. The buyer who maxes out the 43% DTI has a home and a constrained financial life until income grows or the mortgage is refinanced. Both are legal. One is comfortable.
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“Lenders measure ability to repay. The 28% guideline measures ability to repay without financial stress. These are different thresholds, and the gap between them is the risk you take on when you borrow to the lender’s limit.” |
Accessing a DPA program changes the cash required at closing, not the monthly PITI. A buyer using CHFA or MetroDPA eliminates the down payment from the cash-to-close calculation, but the loan amount and monthly payment remain the same as a conventional 5% down loan (since the DPA covers that 5%). The benefit is liquidity: your savings stay available for the true monthly cost of homeownership, not absorbed by the down payment.
As the rate sensitivity table above shows, finding a seller with an assumable 3%–3.5% FHA or VA loan changes the payment calculation more dramatically than any other single variable. A buyer who can qualify for an assumable loan at 3% has $222,000 more purchasing power than a buyer accessing the same $2,800/month payment at 8%. The tradeoff is transaction complexity and the requirement to cover the gap between the remaining loan balance and the purchase price.
Seller financing typically runs 7.5%–9% in 2026 — above conventional rates. At 8% on a $380,000 loan, monthly P+I is $2,657 vs. $2,409 at 6.53%. The difference is $248/month. For buyers who cannot access conventional lending, this premium buys access to ownership rather than continued renting. For buyers who can access conventional lending, seller financing is generally more expensive than the conventional alternative.
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GET YOUR PERSONALIZED PAYMENT ASSESSMENT — FREE |
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Gravvity’s free assessment calculates the comfortable payment range, qualifying purchase price, and available paths based on your actual income, debt load, credit score, and Colorado location — not generic national figures. Start at Gravvity.com/get-started — five questions, no cost. |
Answers to the most common mortgage affordability questions for Denver buyers.
How much mortgage payment can I afford on $70,000 a year?
At $70,000 annual income, your comfortable PITI at 28% is $1,633/month. At a Freddie Mac 30-year rate of 6.53%, that supports approximately a $223,000 purchase price with 5% down ($11,150 down payment). In the Denver area, this price range opens options in Commerce City, Federal Heights, outer Aurora, and some CHFA DPA-assisted purchases. DPA programs through CHFA can cover the 5% down payment if your credit is 620+, leaving your savings for closing costs and reserves. Existing debt reduces this figure dollar-for-dollar.
What is the 28% rule for mortgage payments?
The 28% rule states that your total monthly housing cost — PITI (principal, interest, property taxes, and homeowner’s insurance) plus PMI and HOA if applicable — should not exceed 28% of your gross monthly income. At $100,000 annual income: $100,000/12 × 0.28 = $2,333/month maximum comfortable PITI. The 28% threshold is not a legal ceiling but an affordability guideline designed to ensure housing costs don’t crowd out other financial priorities. Lenders will approve payments up to 31%–33% for FHA and 43% total DTI for conventional. The CFPB explains how lenders use these ratios.
Does my existing debt affect how much mortgage I can afford?
Yes, directly. Every dollar of existing monthly debt reduces your available housing budget by the same dollar under the 36% total DTI limit. At $130,000 income: 36% total DTI = $3,900/month maximum total debt. If you have $1,000/month in existing payments, your maximum PITI drops to $2,900 — not $3,033 from the 28% housing test. Your qualifying purchase price drops by approximately $18,000 for each $133/month in existing debt. The Federal Reserve Bank of Atlanta’s affordability monitor tracks debt burden and affordability in real time.
Can I afford more house by getting a lower interest rate?
Significantly. The same $2,800/month P+I payment supports $664,000 in loan amount at 3.0% vs. $442,000 at 6.53% — a $222,000 difference. In the current market, rates below 6% are only accessible through assumable FHA or VA mortgages (loans originated 2020–2022 at 2.75%–3.5%). Finding a seller with an assumable loan is more transactionally complex but can produce better purchasing power than any other single strategy. See our guide on all ways to buy a home in Colorado for how to find assumable loans.
What is the true monthly cost of owning a home beyond the mortgage payment?
On a $400,000 Denver home with 5% down: P+I = $2,491; property taxes = $175; insurance = $133; PMI = $222; total PITI+PMI = $3,021. Add the 1% annual maintenance reserve ($333/month) for a true monthly ownership cost of approximately $3,354. HOA dues are additive on top of this for condos and townhomes. The PITI your lender quotes ($3,021) is the qualification figure; the $3,354 including maintenance reserve is what you should budget month-to-month.
Should I use the 28% rule or the lender’s maximum DTI to decide what I can afford?
Use 28% for your personal financial planning. Use the lender’s maximum to understand what you’re approved for. These are different numbers — sometimes by $400–$1,000/month — and the gap represents financial risk you take on when you borrow to the lender’s limit. A buyer approved at 43% DTI who loses their job has six months of financial reserves working against a higher payment. The same buyer at 28% has those same reserves working against a lower payment. The 28% guideline isn’t conservative — it’s responsible. The CFPB’s owning-a-home resources explain how lenders evaluate these ratios.
All income and payment calculations verified at stated assumptions. Rate data from Freddie Mac. Updated quarterly.
1. Freddie Mac — Primary Mortgage Market Survey (Rate Data)
2. Consumer Financial Protection Bureau — Owning a Home Resources
3. Consumer Financial Protection Bureau — Mortgage Loan Options
4. Federal Reserve Bank of Atlanta — Home Ownership Affordability Monitor
5. Redfin — Denver Metro Housing Market Data
6. U.S. Census Bureau — Colorado QuickFacts (Median Household Income)
7. Colorado Housing Finance Authority (CHFA) — Homeownership Programs
8. MetroDPA — Denver Metro Down Payment Assistance
9. U.S. Department of Housing and Urban Development — FHA Loan Information
10. Consumer Financial Protection Bureau — Debt-to-Income Ratio Guide
Disclosure: All calculations are directional based on stated assumptions and May 2026 market data. Actual qualifying income, maximum payment, and purchase price depend on your specific credit score, debt load, lender underwriting standards, and property costs. Not financial advice. Updated quarterly. Consult a licensed mortgage professional for your specific situation.