How Much Home Can You Really Afford? A Practical Guide for Military Buyers

Nov 28

House hunting is fun until the numbers hit. It’s easy to scroll through listings, save homes with the perfect kitchen island, and fall in love with a big primary suite all while quietly ignoring the price tag. Every buyer does it at some point.

But when it’s time to get serious, the most important question isn’t “Which house do I like the most?” It’s “How much home can I comfortably afford?”.

For military families, active-duty members, veterans, reservists, and spouses this decision comes with extra factors: PCS timelines, deployments, BAH variations, TDY absences, and the question of whether you’re buying a long-term home or your next duty-station stop.

Here’s a clear, practical guide to help you find a home that fits your budget and your life without stretching you too thin.

Start by Understanding Your True Budget

Your real home buying budget starts with an honest look at your monthly income and expenses. If you’re active-duty, your Leave and Earnings Statement (LES) is your starting point. It details your base pay, special pay, and your Basic Allowance for Housing (BAH) a major factor in determining affordability.

But here’s where many buyers go wrong:
Your entire BAH is not your home buying budget.

Homeownership comes with added expenses: maintenance, insurance, higher utility costs, and the occasional unexpected repair. You want room in your budget, not a payment so tight you can’t take a vacation that doesn’t involve staying with family.

Beyond the LES, list all other income (spouse income, disability pay, side work) and every recurring cost: car loans, childcare, groceries, streaming services, and credit card payments. The more honest you are with this list, the easier it is to understand what you’re truly comfortable spending each month.

Why Pre-Qualification and Pre-Approval Don’t Tell the Whole Story

Online prequalification tools or quick-bank pre-approvals can be useful starting points, but they only tell you how much you can borrow, not how much you should borrow.

There’s a big difference.

A lender may qualify you for a number that looks great on paper, but the monthly payment could leave your budget stretched thin once real life happens: deployments, school costs, holidays, and PCS-related expenses.

A smarter approach is to use the pre-approval as a ceiling, not a recommendation.

Understanding DTI: The Number Lenders Care About Most

Your debt-to-income ratio (DTI) is what lenders watch closely. It represents the percentage of your gross monthly income that goes toward debt.

How to calculate your DTI:

Add up all monthly debt:
- Future mortgage payment
- Car notes
- Student loans
- Credit card minimums
- Personal loans
Divide by your gross monthly income (before taxes).
Multiply by 100.

Most conventional lenders prefer a DTI of 36% or lower.
VA lenders often go up to 41% or even higher, but lower is better for long-term stability.

And here’s the key, lenders look at gross income, but you live on net income.

A “good” DTI on paper can still feel tight in real life, especially if you’re saving for retirement, travel, childcare, or PCS-related costs.

Finding Your Home Price Sweet Spot

Your goal is to balance:

What you qualify for
What fits your lifestyle
What supports your long-term financial health

The right home shouldn’t keep you up at night wondering how you’ll cover next month’s bills. It should support your life, not take it over.

The Hidden Costs First-Time Military Buyers Often Miss

Your mortgage isn’t the whole story. Here are costs to factor in when deciding “how much house” you can truly afford:

Property Taxes

They vary by location and can change your monthly payment drastically.

Homeowners Insurance

Coastal zones, hurricane-prone areas, and older homes can mean higher premiums.

Maintenance & Repairs

Budget 1–2% of the home’s value per year.
Example: $400,000 home → $4,000–$8,000/year.

HOA Fees

These are recurring and unavoidable if you live in an HOA community.

Utilities

A larger home or older one, can mean higher electric, gas, and water bills.

Move-In Costs

Furniture, paint, tools, yard equipment, new locks, and blinds add up quickly. Preparing for these ahead of time keeps you from being surprised later.