How much house can I afford?
The 28/36 rule, the total monthly cost (taxes, insurance, HOA), and the down-payment reality; the method that keeps a house an asset instead of a trap.
- Housing up to 28% of gross income; total debt (housing plus everything else) up to 36%.
- Affordability is monthly-cost math (PITI plus HOA) not the listed price.
- 3-5% down with PMI is how most first homes get bought; 20% is the luxury posture, not the only one.
The rules of thumb: housing at or under 28% of gross income, total debt under 36%, and a monthly total that includes taxes, insurance, and HOA. That's the affordability trinity.
'How much house can I afford?' is three nested questions: what the lender computes (they're hopeful), what 28/36 says (they're neutral), and what your actual month can carry (the judge). Use the middle one; let the last one cast the vote.
Shop by monthly cost (principal, interest, taxes, insurance, HOA) not by sticker. A $320,000 house in a high-tax town can cost more per month than a $380,000 house in a cheap one. The sticker lies sideways.
The two-minute method
- Gross monthly income × 0.28 = your housing ceiling.
- List other monthly debts: car, student, card minimums.
- Housing plus those debts should stay under 36% of gross.
- Translate the ceiling into a price with a mortgage calculator that carries taxes and insurance.
- Round DOWN by 5-10% for the maintenance and furniture reality tax.
The mental table to hold
| Gross monthly | 28% housing ceiling | 36% total-debt ceiling |
|---|---|---|
| $3,000 | $840 | $1,080 |
| $5,000 | $1,400 | $1,800 |
| $7,000 | $1,960 | $2,520 |
| $10,000 | $2,800 | $3,600 |
20% avoids PMI but sits beyond most first-timers' two-year window. Buying at 5-10% with explicit PMI (and refinancing or recasting later) is how many responsible households get their first home without the 20% myth.
The three costs that break budgets
- Property taxes; find the actual past bill, not the listing's estimate.
- The age tax; maintenance runs roughly 1-3% of value a year for the long haul.
- First-year candy; furniture, blinds, tools, lawn. Budget for it or it becomes cards.
When 'afford' means something else
Stability matters more than the band: a snug mortgage in a job you love beats a relaxed one in a job that owns your evenings. Either way, 'possible but unpleasant' is the honest signal to size down.
Related reading: how to save the down payment, the 50/30/20 frame that fits the house into a life, and what a good score does for your rate.
A house is an attic for your life, not a team player in your net worth. Buy the one your month can actually host.
FAQ
Frequently asked questions
How much house can I afford based on my salary?
Run the 28/36 rule: housing under 28% of gross monthly income, total debt under 36%. Many lenders pre-approve near 4-5x income, but the percentage test is the one that protects your month.
Does the 20% down payment matter?
It avoids private mortgage insurance and lowers the monthly cost, but it isn't mandatory. Conventional loans accept 3-5% down with PMI; FHA accepts ~3.5%. If 20% delays you for years, buying at 5-10% with explicit PMI is often the smarter move.
What costs do people forget when buying?
Property taxes, insurance, HOA, maintenance (roughly 1-3% of value a year long-term), closing costs (2-5%), and the first-year tax of furniture and yard gear. Skipping these is how a 'fine' mortgage becomes 'house poor.'
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