how far can houses be built underground in terraria

Answer 1

you can only remove the dirt back wall so once the back wall shows rocks in it, you need to go up to build. i dont have adepth meter so i cant say the exact distance. though mine has varying levels around my mine

also to take out the dirt backing lower down u need to run a line all the way down fromm the surface. dont worry about looks there since it can be refilled with dirt walls