The usual rule of thumb is that your housing payment shouldn't exceed 28% to 30% of your gross monthly income. In West Hills, where the median home is around $1.15 million, that rule points to a household income of roughly $260,000 to $290,000.
That number stops a lot of people reading. It shouldn't — because the rule of thumb is the least accurate part of this.
What lenders actually look at
Not the 30% rule. They use debt-to-income ratio (DTI), and there are two:
Front-end DTI — housing costs alone as a share of gross income. Lenders generally want 28% or under.
Back-end DTI — housing plus every other monthly debt: car payments, student loans, credit card minimums, child support. This is the one that decides. Conventional loans typically allow up to 43%, and up to 50% with strong compensating factors like large reserves or an excellent credit score.
That difference matters enormously. Two buyers earning $200,000 qualify for very different amounts if one has a $900 car payment and $600 in student loans and the other has neither.
A real calculation
Household income $225,000/year ($18,750/month), no other debt, 20% down:
Purchase price $1,150,000
Down payment (20%) $ 230,000
Loan amount $ 920,000
Principal & interest (~6.5%, 30y) $ 5,815
Property tax (~1.15%/yr) $ 1,102
Homeowners insurance $ 210
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Monthly housing payment $ 7,127
Front-end DTI 38%
That's above the 28% guideline, and it's still a loan many lenders would make — because with no other debt, the back-end DTI is also 38%, comfortably inside the 43% limit.
The rule of thumb said no. The actual underwriting says yes.
Now add a $700 car payment and $400 in student loans: back-end DTI goes to 44%, and it becomes marginal.
Try your own numbers in the affordability calculator.
What moves the number most
Other debt, by a wide margin. Paying off a car loan can increase your buying power by $80,000–$120,000. That is usually a far better use of $15,000 than adding it to your down payment.
Interest rates. A one-point rate move changes what you can borrow by roughly 10%.
Property taxes. California's Prop 13 sets your assessment at purchase price, so your tax bill is based on what you pay — not what the current owner pays. Never budget from the seller's tax bill. In parts of West Hills, Mello-Roos or special assessments add more.
Insurance. Wildfire risk has pushed premiums up substantially in the western Valley and near the hills, and some carriers have pulled back. Get a real quote for the specific address early — it feeds directly into your DTI, and a surprise here can sink an approval.
Two things worth knowing
Pre-qualification is not pre-approval. Pre-qualification is a conversation. Pre-approval means a lender reviewed your documents. In a competitive situation, only the second one counts.
You don't need 20% down. Conventional loans go to 5%, FHA to 3.5%, VA to 0% for eligible buyers. Below 20% you'll pay mortgage insurance, which raises the monthly payment — but it can be the difference between buying now and buying in four years. California also runs down payment assistance programs worth asking a lender about.
The short version
The 30% rule is a starting point, not a decision. Talk to a lender before you decide you can't afford it — the conversation is free, it takes about twenty minutes, and buyers are wrong about their own number in both directions surprisingly often.
If you have consumer debt, ask what paying it off would do to your approval. That answer surprises people most.
Written by Emily Rose, a licensed California REALTOR® serving West Hills and the San Fernando Valley. Figures are estimates for general guidance, not a lending offer. Median price per the current local guide; rates and insurance costs change constantly. Only a lender can tell you what you qualify for.