How Much House Can I Afford? A Realistic Guide

Most mortgage lenders will pre-approve you for more house than you should actually buy. The point of this guide is to help you separate what you can borrow from what you can comfortably afford to live with for the next 25 years.

The 28/36 rule

A common starting point: keep your housing costs under 28% of your gross monthly income, and your total debt payments under 36%. If you earn $6,000 a month before tax, that caps housing at $1,680 and total debts at $2,160. It is a guideline, not a law — but it is a reasonable line in the sand.

What "housing costs" really means

The monthly mortgage payment is only part of the bill. Add property tax, home insurance, possibly mortgage insurance, plus the maintenance fund every owner needs but most underestimate (a rough rule: 1% of the home's value per year). A $1,500 mortgage payment can easily mean $2,000+ in real monthly cost.

Stress-test your budget

Before you commit, try paying the proposed monthly amount into a savings account for three months. If you barely notice it, you are fine. If it pinches, you have your answer — and you are several thousand richer for the experiment.

Run the numbers

Plug different home prices into our mortgage calculator to see how the monthly payment changes with the loan amount, interest rate, and term. A 0.5% rate difference over 30 years is often tens of thousands of dollars in total interest — small numbers, large stakes.