How Much House Can You Really Afford?

How Much House Can You Really Afford?

Buying a home is one of the biggest financial decisions you’ll make—and it all starts with knowing your true budget. While online mortgage calculators can give a rough idea, affordability goes beyond just monthly payments.

1. Understand the 28/36 Rule
Lenders typically follow the 28/36 rule: your monthly housing expenses (including mortgage, taxes, and insurance) should not exceed 28% of your gross monthly income. Your total debt—including car loans, credit cards, and student loans—should stay under 36%.

2. Factor in the Down Payment
A larger down payment means a lower loan amount and potentially lower monthly payments. Most conventional loans require at least 5%, but putting down 20% helps you avoid private mortgage insurance (PMI), which can add to your monthly costs.

3. Consider All Monthly Expenses
Your mortgage isn’t your only expense. Be sure to budget for utilities, maintenance, HOA fees, and property taxes. Unexpected repairs and rising insurance premiums can also affect affordability.

4. Check Your Credit and Debt Load
A higher credit score can qualify you for a better interest rate, saving you thousands over the life of your loan. Reducing existing debt before applying can also improve your debt-to-income ratio and increase your loan approval odds.

5. Get Pre-Approved—Not Just Pre-Qualified
A pre-approval gives you a realistic price range based on verified income, credit, and assets. It’s a more accurate picture of what you can afford—and makes you a stronger buyer in competitive markets.

Bottom Line:
Don’t stretch yourself too thin. Just because you qualify for a certain loan amount doesn’t mean it’s wise to spend it all. Buying within your means gives you financial flexibility and peace of mind—something every homeowner deserves.