How much house can I afford? A simple, honest answer
The amount a lender will approve and the amount you can comfortably afford are two very different numbers. Approval is based on ratios; comfort is based on your actual life. Here's how to find the price that won't keep you up at night.
The 28/36 rule
The most widely used guideline is the 28/36 rule:
- Spend no more than 28% of your gross monthly income on housing (mortgage, taxes, insurance).
- Keep total debt payments — housing plus car loans, student loans, credit cards — under 36% of gross income.
On a $7,000/month gross income, that's about $1,960 for housing and $2,520 for all debt combined. These aren't laws, but they're a sane starting point that lenders broadly echo.
What actually goes into the payment
A mortgage payment is more than principal and interest. The full monthly cost includes:
- Principal & interest — the loan itself
- Property taxes — vary widely by location
- Homeowners insurance
- PMI — if your down payment is under 20%
- HOA fees — for some properties
It's easy to budget for the loan and forget the rest. Use the Mortgage Calculator to see the all-in monthly payment, including taxes, insurance, and PMI — not just principal and interest.
The down payment changes everything
A larger down payment lowers your loan amount, your monthly payment, and can eliminate PMI at 20%. It also affects how much home you can buy at a given monthly budget. Before fixing on a price, model a few down-payment scenarios — the difference in monthly cost is often larger than buyers expect.
Don't forget the hidden costs of owning
Affordability isn't just the mortgage. Budget for:
- Maintenance and repairs (a common rule: ~1% of home value per year)
- Higher utility bills than renting
- Furnishing and moving costs
- An emergency fund that survives a surprise
A house that's affordable on paper but leaves no cushion isn't actually affordable.
How to find your number
- Calculate 28% of your gross monthly income — that's your target housing payment.
- Work backward to a price using the Mortgage Calculator, adjusting the down payment and rate.
- Subtract a margin for maintenance and life — aim to spend below the maximum, not at it.
- Confirm total debt stays under 36% of income.
The bottom line
You can probably afford less than a lender will approve — and that's a good thing. Target around 28% of gross income for housing, model the full payment (taxes, insurance, PMI included) in the Mortgage Calculator, and leave room for the costs of actually owning a home. The goal isn't the biggest house you qualify for; it's the one you can live in comfortably.