How Much House Can You Afford?

Figuring out how much house you can afford isn’t just about the price of the home. It’s about what fits comfortably into your monthly budget without stretching you too thin.

Start with your income and debt. A common rule lenders use is the 28/36 rule:

• Spend no more than 28% of your gross monthly income on housing

• Keep total debts (including your future mortgage) under 36% to 43%

Your monthly housing cost should include:

• Mortgage (principal + interest)

• Property taxes

• Homeowners insurance

• HOA fees (if any)

Many buyers forget taxes and insurance, which can significantly increase the real monthly cost.

Next is your down payment and upfront costs. A larger down payment lowers your monthly payment and may help you qualify for a higher price range. You’ll also need to prepare for closing costs, usually around 2% to 5% of the home price.

Simple Estimate Formula

• Take your gross monthly income

• Multiply by 0.28

• Subtract your monthly debts

That gives you a safe monthly housing budget.

Example

If you earn $5,000/month:

• 28% = $1,400

• Minus $400 debts = $1,000 housing budget

That typically translates to a home price around 3× to 5× your annual income, depending on interest rates and loan terms.