“How much house can I afford?” is the first question every buyer asks — and the answer depends on a lot more than your salary. Your existing debts, down payment, interest rate, and local taxes all shape the number. This guide walks through the rule lenders use and the costs people forget, so you can set a budget you’ll be comfortable with for years.
Start with the 28/36 rule
The most common affordability guideline is the 28/36 rule:
- 28% (front-end ratio): your total monthly housing payment should stay at or below about 28% of your gross (pre-tax) monthly income.
- 36% (back-end ratio): all your monthly debt payments combined — housing plus car loans, credit cards, and student loans — should stay at or below about 36% of gross income.
Lenders often allow higher back-end ratios (43% is a common ceiling, sometimes more), but 28/36 is a sensible target that leaves room to breathe. Want your exact number? Plug your details into the Home Affordability Calculator.
Why your debts matter as much as your income
Notice that the 36% rule counts all your debt. That’s why two people with the same salary can afford very different homes. Every $100 of existing monthly debt directly reduces what you can borrow for a house. Paying down a car loan or credit card before you apply can raise your budget more than a raise would — check your debt-to-income ratio first.
The costs people forget
A mortgage payment is more than principal and interest. Budget for the full picture:
- Property taxes — vary widely by location; can be 0.3%–2%+ of value per year.
- Homeowners insurance — required by lenders.
- PMI — private mortgage insurance, usually required if you put down less than 20%.
- HOA dues — in many condos and planned communities.
- Maintenance — a common rule of thumb is ~1% of the home’s value per year.
- Utilities — often higher than in a rental.
The Mortgage Calculator adds taxes, insurance, PMI, and HOA so you see the true monthly cost — not just the loan.
A quick worked example
Say you earn $90,000 a year ($7,500/month gross) with $500/month in other debts:
- 28% rule: up to ~$2,100/month for housing.
- 36% rule: up to ~$2,700 total debt − $500 existing = ~$2,200 for housing.
- The lower of the two (~$2,100) is your ceiling. After setting aside taxes and insurance, the rest supports your loan amount — and your down payment is added on top to reach a maximum home price.
Qualifying vs. comfortably affording
A lender’s maximum is not your target. The amount you qualify for assumes you’ll direct a large share of income to housing. The amount you can comfortably afford leaves room to keep saving, handle a surprise repair, and enjoy your life. Aim for the second number.
The bottom line
Use the 28/36 rule as your starting frame, count all your debts, and budget for the full cost of ownership — not just principal and interest. Run your real numbers in the Home Affordability Calculator, then browse our Loans guides as you get ready to buy.
Frequently asked questions
What percentage of my income should go to a mortgage?
How much do I need for a down payment?
Does my credit score affect how much house I can afford?
What costs do people forget when budgeting for a home?
Sources
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