How Much House Can I Afford? Simple Rules & Real Steps

Deciding how much house you can afford can feel confusing, but if you break it into clear steps it becomes a lot simpler. Start by looking at your gross monthly income — that’s the amount before taxes. A common budgeting rule is to aim to spend no more than about 28% of that gross income on housing costs. Housing costs include your mortgage principal and interest, property taxes, homeowners insurance, and any homeowners association fees. A broader rule is the 36% total debt guideline — that means all your monthly debt payments combined, including car loans, student loans, minimum credit card payments and your housing payment, should ideally stay under 36% of gross income. Next, know your credit score and job stability. Lenders care about both. A better credit score usually gets you a lower mortgage interest rate, which increases how much house you can afford without increasing monthly payment. If you have irregular income, lenders will look at a longer history of earnings. Use a real affordability calculator online and plug in a range of down payments and interest rates to see monthly payments at each home price. Try several scenarios — a low-down payment with mortgage insurance, a 20% down payment without mortgage insurance, and a middle option. Don’t forget upfront and ongoing costs. Upfront, you’ll have closing costs — usually 2 to 5% of the loan amount — and your down payment. Ongoing, add utilities, maintenance, yard work, and an emergency fund for repairs. A good rule of thumb is to budget 1% to 2% of the home value per year for maintenance. Also factor in property taxes and how they might rise. If you plan to remodel, save for that separately and don’t assume you can finance it into the mortgage at a low rate. Be realistic about lifestyle. If a mortgage payment leaves you little for groceries, transport, or saving, it’s too much. Think about future changes: will your income likely increase soon? Are you planning children, or will your commute change? All those shift the right price range. Another helpful step is getting pre-approved by a lender — it gives a practical upper limit based on your actual financial profile. But pre-approval is not a recommendation to spend that amount: it’s the lender’s view of what you can borrow, not what you should responsibly spend. Finally, look at local market conditions. In some hot markets, you may need flexibility on down payment or consider different neighborhoods for better value. In slower markets you might get more house for the same payment. In summary: calculate using the 28/36 rules as a start, plug exact numbers into an affordability calculator, plan for upfront and ongoing costs, keep an emergency buffer, and let your monthly budget and life plans decide the final number. That approach keeps you safe, comfortable, and ready to enjoy the home rather than worry about it.