How Much Home Can I Afford? Your Guide to Smart Home Buying (2025)
Written By: Connor Anderson
Before you shop for your dream home in Utah, it’s important to know how much you can afford. This guide explains the 28/36 rule, down payments, and how programs like Utah’s S.B. 240 can make buying easier—especially in Daybreak.
Quick Answer
Most lenders use the 28/36 rule to guide affordability. Keep housing costs at or below 28% of your income, and all debts combined under 36%. First-time buyers typically put down around 9%, but low-down-payment loan programs are available. Utah’s S.B. 240 can provide up to $20,000 toward a qualifying new home in Daybreak.
- 28/36 rule: ≤28% of income for housing; ≤36% for all debts combined.
- Average down payment: ~9% for first-time buyers (NAR, 2024).
- Programs: Utah’s S.B. 240 offers up to $20,000 for newly built homes ≤$450K.
- Daybreak advantage: Affordable new homes, builder incentives, and lifestyle amenities.
The 28/36 Rule
The 28/36 rule is a quick way to estimate what you can comfortably afford:
- 28%: No more than 28% of your gross monthly income should go toward mortgage, taxes, insurance, and HOA fees.
- 36%: No more than 36% of your income should go toward all debts, including housing, car loans, student loans, and credit cards.
Example: If you earn $6,000/month, aim to keep housing costs under $1,680 and all debts under $2,160.
Learn more about the 28/36 rule.
Debt-to-Income Ratio (DTI)
Lenders use your debt-to-income ratio to determine mortgage eligibility:
- Front-end DTI: Housing expenses only.
- Back-end DTI: Housing plus all other debts.
Most lenders want your back-end DTI ≤36%, though some programs allow higher.
Down Payment Expectations
While the national median down payment for first-time buyers is about 9%, you may be able to buy with much less:
- Conventional loans: 3–5% down with PMI.
- FHA loans: 3.5% down.
- VA/USDA loans: 0% down if you qualify.
Remember, you’ll also need to budget for closing costs (2–5% of the purchase price).
Tips for saving your down payment.
Other Costs to Budget For
- Closing costs (2–5% of purchase price)
- Property taxes
- Homeowners insurance
- HOA fees (if applicable)
- Utilities and ongoing maintenance
Utah’s First-Time Homebuyer Program (S.B. 240)
In 2025, Utah’s S.B. 240 program offers up to $20,000 toward the purchase of qualifying newly built homes priced ≤$450,000. Funds may be used for:
- Down payment
- Closing costs
- Permanent interest rate buydown
The loan carries 0% interest and usually doesn’t require monthly payments—it’s typically repaid at refinance or sale. Learn more about S.B. 240.
Why Daybreak is a Smart Choice
Daybreak offers a variety of new homes—many priced under $450K and eligible for S.B. 240 assistance. Plus, you’ll enjoy:
- Move-in ready inventory and builder incentives
- A walkable community with parks, trails, and Oquirrh Lake access
- Long-term value in one of Utah’s fastest-growing areas
Find a home or schedule a tour.
Mortgage Calculator: A Handy Tool
Daybreak’s mortgage calculator is designed to estimate the total purchase price of the home you can afford and outline your monthly mortgage payments. This will give you an idea of how much you will need to save and how your monthly expenses will change should you secure the home.
To estimate your home affordability with our mortgage calculator, you will need your total annual income and monthly debts for all borrowers. You can adjust the down payment amount based on how much money you can put down in one sum.
Your total monthly payment
You Can Afford a Home in Daybreak
To ensure you purchase a home that you will love for years to come, you need to understand how much you can afford now. Explore new homes at daybreakutah.com/find-a-home/ to see a range of homes, from townhomes to estate homes and everything in between.
Approximately one in every six new home sales in the Salt Lake Valley happens at Daybreak. Join the other homebuyers who have chosen to call Daybreak their home and experience all that our thriving, growing community has to offer.
*Content contained in this blog post is provided as informational only. Please consult with a trusted expert for individual financial planning.
