A widely-used starting rule is that your maximum home price should be 3–4× your gross annual household income. On a $120,000/year combined income, that's a $360,000–$480,000 home. But in San Diego — where the median home price exceeded $850,000 in early 2026 — that rule alone won't cut it. Lenders care about your debt-to-income (DTI) ratio, down payment size, and current mortgage rates far more than raw multiples.
| DTI Type | What It Measures | Max Allowed (Conventional) |
|---|---|---|
| Front-end DTI | Housing costs ÷ gross monthly income | 28% |
| Back-end DTI | (Housing + all debts) ÷ gross monthly income | 43–45% |
| FHA loans | More flexible with compensating factors | 57% back-end (max) |
| VA loans | No front-end limit, residual income test | 41% guideline |
| Jumbo loans (SD) | Stricter — SD conforming limit is $1,016,650 | 43% back-end |
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Download Free GuideThe table below assumes a 20% down payment, 7.1% 30-year fixed rate, and a back-end DTI of 43% with no existing debt. Actual numbers shift with student loans, car payments, and credit card minimums — plug your real numbers into the calculator below.
| Annual Household Income | Max Monthly Payment (28%) | Estimated Max Home Price | Down Payment (20%) |
|---|---|---|---|
| $80,000 | $1,867 | ~$280,000 | $56,000 |
| $100,000 | $2,333 | ~$350,000 | $70,000 |
| $120,000 | $2,800 | ~$420,000 | $84,000 |
| $150,000 | $3,500 | ~$520,000 | $104,000 |
| $200,000 | $4,667 | ~$700,000 | $140,000 |
| $250,000 | $5,833 | ~$870,000 | $174,000 |
A larger down payment does three things: lowers your monthly payment, eliminates PMI (private mortgage insurance, typically 0.5–1.5% of the loan annually), and makes your offer more competitive in San Diego's tight inventory. FHA loans allow as little as 3.5% down with a 580+ credit score but require MIP (mortgage insurance premium) for the life of the loan on 30-year terms — that can add $200–$400/month on a $700K purchase. Conventional loans with 10% down require PMI until you hit 80% LTV, which at today's prices takes 5–8 years in San Diego. If you can reach 20%, do it — the savings on a $750,000 San Diego home exceed $50,000 over 10 years in eliminated PMI alone.
Mello-Roos and HOA fees: Many San Diego communities — Chula Vista, Otay Ranch, Rancho del Rey — carry Mello-Roos assessments of $1,000–$4,000/year on top of property taxes. HOA fees in condo-heavy areas like Mission Valley or Downtown SD average $350–$700/month. Both count in your front-end DTI calculation, reducing your max purchase price significantly. Property taxes: San Diego County effective rate averages 1.1–1.25% of assessed value annually. On an $800,000 home, that's $8,800–$10,000/year ($733–$833/month) factored into your PITI payment. Homeowners insurance: San Diego's wildfire risk has pushed HO insurance premiums up 20–40% since 2022 — budget $2,000–$4,000/year for a single-family home, higher in WUI zones.
Several programs can shift your affordability ceiling meaningfully: CalHFA MyHome Assistance provides up to 3.5% of the purchase price as a deferred down payment loan (zero monthly payment until refinance/sale). San Diego Housing Commission runs a down payment assistance program with income limits around 80% AMI (~$85,000/year for a single buyer in SD). VA loans for veterans and active duty eliminate the down payment requirement entirely — particularly powerful in SD given the large military population. USDA Rural Development loans apply to some outer East County areas (Alpine, Ramona) and require 0% down. Each program has income, price, and usage restrictions — your lender can run a combined scenario through DU or LP.
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