How Much House Can I Afford?

"How much house can I afford?" is the question almost every buyer asks before they open a single listing. The honest answer is not a round number you pull from a website — it is a range built from your income, your existing debts, your savings, and what you are genuinely willing to give up elsewhere in your monthly budget. Getting this number right matters more than almost any other step in the process, because a purchase that stretches you too thin can turn a dream home into a stressful monthly obligation.

A useful place to start is the 28/36 rule, the shorthand many lenders use to size up a mortgage. The rule says your housing payment should stay at or below 28% of your gross monthly income, and your total debt payments — housing plus credit cards, auto loans, and student loans — should stay at or below 36%. It is a guideline, not a law, but it gives you a realistic ceiling to work against before you fall in love with a price tag you cannot actually support.

The 28/36 rule, in plain English

The 28/36 rule is really two ratios wearing one name. The "28" covers your housing costs — principal, interest, property taxes, homeowners insurance, and any mortgage insurance or association dues. Divide your total monthly housing payment by your gross monthly income (what you earn before taxes and other deductions), and lenders generally like to see the result at 28% or lower. The "36" covers everything you owe each month: that same housing payment plus credit cards, car loans, student loans, and any other recurring debt. Keep the combined figure at 36% or below and you are in the range most conventional lenders are comfortable with.

These percentages are not universal. Some loan programs allow higher ratios for well-qualified borrowers, while a conservative lender or a tight budget might argue for something lower. What matters is that the rule gives you a benchmark you can run against your own numbers instead of guessing.

Front-end versus back-end debt-to-income

Loan officers talk about two separate figures that map onto those two percentages. Your front-end ratio is housing only — the mortgage payment divided by income. Your back-end ratio is all debt divided by income. The back-end number is usually the one that decides whether a loan gets approved, because it shows whether you can carry the new house payment on top of everything else you already owe. In practice, most people bump into the back-end limit before they ever touch the front-end one.

Understanding the difference also helps you see where you have room. If your car loan is the reason your back-end ratio is high, paying it down or trading down to a less expensive vehicle can move your maximum home price more than you might expect.

Turn your income into a monthly payment

Once you know your target ratios, the math flows one direction: start with gross monthly income, apply the percentage, and subtract the non-mortgage pieces to find what is left for principal and interest. If you earn $6,000 a month before taxes, for example, 28% is $1,680. From that you subtract estimated property taxes, homeowners insurance, and any mortgage insurance or HOA dues, and the remainder is what your principal-and-interest payment can be. From there, a mortgage calculator works backward to a loan amount and, with your down payment added, a purchase price.

Keep in mind that taxes and insurance vary sharply by location and home. A house in a high-tax county can carry a monthly escrow bill that eats a large share of that 28% before the loan itself takes a cent. This is why two homes with the same sticker price can feel very different in your checking account.

Budget below the maximum

Just because a lender will approve a payment does not mean you should spend it. The maximum a bank will lend is a ceiling, not a recommendation. Owning a home costs more than the mortgage, and those extra costs are real and recurring:

Utilities — water, sewer, gas, and electric often run higher in a house than in an apartment.
Maintenance and repairs — roofs, HVAC systems, and appliances eventually fail, and none of them schedule an appointment.
Savings — you still need to fund retirement, an emergency fund, and other goals after the mortgage is paid.
Lifestyle — groceries, childcare, commuting, and the occasional vacation should not disappear to cover a house payment.

Many buyers find they are happiest landing comfortably under the ratio limits. Leaving a margin means a car repair or a smaller-than-expected bonus does not become a crisis.

The role of your down payment and interest rate

Your down payment and your interest rate work together to set the monthly payment. A larger down payment shrinks the loan amount and, if it pushes you past a threshold, can remove private mortgage insurance entirely. A lower interest rate reduces the payment on the same loan balance. Both are worth chasing, but the rate is set partly by the market and partly by your credit, so it is only partly in your control. The down payment, on the other hand, is something you can save toward deliberately.

Rates move constantly, and the difference between a good rate and a mediocre one on a 30-year loan adds up to a meaningful amount of money over time. This is one reason it pays to shop more than one lender when you are serious about buying.

Putting it into the affordability calculator

Rather than doing all of this by hand, run your numbers through an affordability calculator. Plug in your gross income, monthly debts, down payment, and an estimate of your property taxes and insurance, and the tool will back out a comfortable purchase price and an estimated monthly payment. Change one input — a bigger down payment, a paid-off car — and you can see how the price range shifts. It is the fastest way to turn a fuzzy question into a concrete number you can take house hunting.

Credit and reserves still matter

Affordability is not only about ratios. Your credit score influences the interest rate you are offered, which in turn changes the payment and the price you can afford. Lenders also look at your reserves — money left in savings after closing — as a cushion against the unexpected. A borrower with strong credit and several months of payments in the bank is in a much better position than one scraping together exactly the down payment and nothing else.

A comfortable home price is the one that fits your full budget — utilities, maintenance, and savings included — not the largest number a lender will approve.

For a clear walk-through of the factors that go into a housing budget, the Consumer Financial Protection Bureau's homeownership guide is a reliable place to start. Affordability is personal, and the right number for you depends on your income, debts, and priorities — so treat any estimate as a starting point, not a promise.

Related: Use our free mortgage calculator to model your own scenario, or read more in our blog.

Last reviewed: November 2, 2026 · Junior Franco

Junior is a former mortgage loan officer and underwriter with more than a decade of experience originating conventional, FHA, VA, and USDA loans. He writes plain-English guides that help homebuyers and homeowners understand the numbers behind their mortgage.