Many loans require a 20% down payment, but Federal Housing Administration (FHA) loans only require a minimum of 3.5%. These loans typically require Private Mortgage Insurance (PMI), which is included in this affordability calculation. It’s common for first-time buyers to buy a home with a down payment smaller than 20%.

Lenders recommend that your monthly debt payments be less than 36% of your income. You may find it difficult to afford these mortgage payments.