The honest answer is that it depends less on the price of the house than on
three things people rarely have in front of them: your monthly debts, the Harris
County tax bill, and the insurance quote. In Houston those last two do more
damage to a payment than most buyers expect, and they are the reason a national
affordability calculator overstates what you can buy here.
So rather than give you a multiplier, here is the arithmetic we actually run,
with the Houston numbers in it.
What a lender is really measuring
Underwriting looks at your debt-to-income ratio — every monthly debt
payment, including the new mortgage, divided by your gross monthly income. On
most conventional files that total lands at or under 43–45%, and it can go
higher with strong reserves or a large down payment.
Notice what is in that number and what is not. Your car payment, student
loans, credit card minimums and child support all count. Your groceries,
utilities, phone bill, daycare and 401(k) contribution do not. That is why the
number a lender approves is often larger than the number you are comfortable
paying, and why the second one is the one that matters.
The four pieces of a Houston payment
- Principal and interest. The part everyone thinks about,
and the only part a rate quote covers.
- Property taxes. Texas has no state income tax and the
property tax rate reflects it. Across Harris County, a combined rate near 2%
of assessed value is a reasonable planning figure, though it varies by school
district, MUD and city limits. On a $400,000 house that is roughly $667 a
month before any exemption.
- Homeowners insurance. Higher on the Gulf Coast than in
most of the country. Get a real quote during your option period rather than
assuming a national average — in parts of the metro it is the difference
between a payment that works and one that does not.
- Mortgage insurance, if you put down less than 20% on a
conventional loan. It comes off later; it counts now.
What that works out to, by income
These are estimates, and the assumptions under them are listed below so you
can see exactly what would change the answer. The second column is the one to
pay attention to, because almost nobody has zero other debt.
| Household income |
Estimated max price, no other debt |
With $500/month of other debt |
| $75,000 | about $314,000 | about $251,000 |
| $100,000 | about $427,000 | about $364,000 |
| $150,000 | about $654,000 | about $591,000 |
| $200,000 | about $880,000 | about $817,000 |
Assumptions: 30-year fixed at 6.25%, 5% down, a 43% total
debt-to-income ratio, property taxes at 2.0% of price, homeowners insurance at
$200 a month, and mortgage insurance at 0.4% of the loan amount a year. Change
the rate and every row moves. Change your debts and every row moves more.
Two things worth noticing in that table. First, $500 a month of car and
student loan payments costs you roughly $60,000 of buying power — more
than most people would guess, and more than they could make up with a bigger
down payment. Second, at $200,000 of income you are pushing past the 2026
conforming loan limit of $832,750, which means a
jumbo loan
and a different set of requirements.
The Houston-specific things that move the answer
File your homestead exemption
It is free, it reduces the taxable value of your primary residence, and it
caps how fast the assessed value can rise year to year. File it for the year you
close. A surprising number of Houston buyers never do, and it costs them every
year afterward.
Watch new construction taxes
On a brand new home, the first tax assessment is often based on the lot
rather than the finished house. The escrow set up at closing can be built on
that low number, and when the home is assessed as built, the payment jumps. Ask
what the payment looks like fully assessed before you commit, not after.
Get the insurance quote before the option period ends
Flood zone status, roof age and claims history all move the premium, and the
range across Harris County is wide. This is the single most common reason a
payment estimate turns out to be low.
MUD districts
Many newer Houston-area subdivisions sit in a municipal utility district,
which adds to the tax rate. Two houses at the same price in different
subdivisions can carry meaningfully different payments.
How to raise the number
- Pay off a small balance rather than a large one.
Qualifying runs on monthly payments, not balances. Clearing a $4,000 car note
with a $450 payment helps far more than paying $4,000 against a student loan
with a $90 payment.
- Improve the credit score before you lock. Both your rate
and your mortgage insurance are priced in tiers. Moving up one tier can be
worth more than a rate shopping trip.
- Look at down payment assistance. Texas runs
several
programs that put the down payment back in your pocket.
- Consider a longer or different loan structure. FHA allows
higher debt ratios than conventional, which can be the difference on a
borderline file.
The number that matters more than the maximum
Everything above is the ceiling. The useful question is what payment you want
to live with, and it is worth answering before you go shopping, because it is
much harder to answer once you have seen a house you like.
Work backward from the payment instead of forward from the price. Pick the
monthly number you would be comfortable with if your income did not change for
three years, and we will tell you what price that buys at today's rates, with
the real Harris County tax rate for the specific neighborhood.
Get a Houston
pre-approval, or run the numbers yourself with our
affordability
calculator and
payment
calculator.
Estimates on this page are illustrations, not loan offers or a commitment
to lend. Actual qualification depends on credit, income documentation, the
property and the program. Texas United Mortgage, LLC, NMLS #2442778. Equal
Housing Lender.
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