How Much House Can You Really Afford? Breaking Down the Numbers

Buying a home is exciting, but one of the first questions every buyer faces is: “How much house can I really afford?” It’s about more than just what the bank says you qualify for — it’s about making sure your monthly payment fits comfortably into your lifestyle and long-term financial goals. Let’s break it down.

1. The 28/36 Rule

Lenders often use the 28/36 rule to decide how much you can borrow:

• No more than 28% of your gross monthly income should go toward housing (mortgage, taxes, insurance).

• No more than 36% of your income should go toward total debt (including credit cards, car loans, student loans).

Example: If you earn $6,000/month, your housing budget should stay under $1,680.

2. Factor in More Than Just the Mortgage

Your monthly payment isn’t just principal and interest. You’ll also need to account for:

• Property taxes (varies by area).

• Homeowner’s insurance.

• Private Mortgage Insurance (PMI) if you put less than 20% down.

• HOA fees if you buy in a community with amenities.

• Utilities and maintenance costs.

A house that looks affordable at first glance may stretch your budget once these are added in.

3. Consider Your Down Payment

The size of your down payment has a big impact on affordability:

• A larger down payment means a smaller loan and lower monthly payments.

• Even 5–10% down can make a difference, though 20% is ideal to avoid PMI.

4. Don’t Forget About Lifestyle Expenses

Ask yourself: Will buying this home still allow you to save for retirement, travel, or other financial goals? Stretching too far for a house can lead to “house poor” living — owning the home but sacrificing everything else.

5. Plan for the Unexpected

Life happens — job changes, medical expenses, or repairs. A good rule of thumb is to keep 3–6 months of living expenses in savings before buying. That way, your home feels like a blessing, not a burden.

Final Thoughts

How much house you can afford isn’t just a math equation — it’s about balance. Yes, the lender will tell you what you qualify for, but only you can decide what you’re comfortable with. By looking at income, debts, lifestyle, and savings, you’ll be in a strong position to buy a home with confidence.