How much house can you afford?

"How much house can I afford?" has two answers: the amount a lender will approve you for, and the amount you can comfortably live with. They are rarely the same number, and the gap between them is where a lot of financial stress is born. Here is how to find both.

The 28/36 rule

The most widely used affordability guideline is the 28/36 rule, and it has two parts:

• 28% (the front-end ratio): Your total monthly housing payment should not exceed 28% of your gross monthly income. Housing here means the full payment — principal, interest, property taxes, and homeowners insurance (often called "PITI"), plus any HOA fees.
• 36% (the back-end ratio): All your monthly debt payments combined — housing plus car loans, student loans, credit card minimums — should not exceed 36% of gross monthly income.

Example: if you earn $6,000 a month before taxes, the 28% rule caps housing around $1,680, and the 36% rule caps total debt payments around $2,160. If you already pay $400 toward a car and student loans, that leaves roughly $1,760 for housing under the back-end limit — so the 28% figure ($1,680) becomes your practical ceiling.

Work backward from the payment

Once you know your comfortable monthly payment, you can work backward to a price. Take your target payment, subtract estimated taxes and insurance to isolate the principal-and-interest portion, then use our loan calculator to find the loan amount that produces that payment at current rates. Add your down payment, and that is roughly your price range.

This is more reliable than starting from a home price you like, because it anchors the decision to what actually fits your budget every month.

The costs people forget

The mortgage payment is only part of the picture. Budget for these too, or the "affordable" house will not feel affordable:

• Property taxes and insurance — often 1.5–3% of the home's value per year combined, and they rise over time.
• Private mortgage insurance (PMI) — usually required if your down payment is under 20%.
• Maintenance — a common rule of thumb is 1% of the home's value per year for repairs and upkeep.
• Closing costs — typically 2–5% of the loan amount, paid upfront.
• Utilities — often higher than renting, especially moving from an apartment to a house.

Why a smaller loan can be the smart move

Just because a lender approves you for the maximum does not mean you should borrow it. Buying below your ceiling leaves room for savings, retirement contributions, and life's surprises — and it makes those extra mortgage payments (which, as our amortization guide shows, save enormous interest) far easier to make.

The bottom line

Use the 28/36 rule as your guardrail, work backward from a comfortable monthly payment to a price, and remember to budget for taxes, insurance, and maintenance on top of the mortgage. The best house is not the biggest one you can qualify for — it is the one that still lets you save, invest, and breathe.

Educational information only, not financial or lending advice. Actual affordability depends on your full financial picture and lender criteria.