How Much House Can I Afford? (A Simple Guide)
5 min read
Before you fall in love with a listing, it pays to know your real budget. Lenders don't just look at the price — they look at your income, your existing debts, and your down payment to decide what you can borrow.
This guide walks through the simple rules lenders use, so you can estimate how much house you can afford with confidence.
Step by step
- 1Add up your gross monthly income
Use your income before taxes. If you're buying with a partner, combine both incomes — lenders consider the total household income on the application.
- 2Apply the 28% front-end rule
A common guideline keeps your total monthly housing payment — principal, interest, taxes, and insurance — under 28% of gross monthly income. That's your target payment ceiling.
- 3Check the 36% back-end rule
Your housing payment plus all other debt (car loans, student loans, credit cards) should stay under 36% of gross income. High existing debt lowers what you can borrow.
- 4Factor in your down payment
A larger down payment means a smaller loan and may help you avoid PMI (private mortgage insurance) at 20% down. Enter your down payment to see the home price it supports.
- 5Run your numbers
Use the Home Affordability Calculator to turn your income, debts, rate, and down payment into a realistic home price and monthly payment.
Tips
- Just because you qualify for a payment doesn't mean you should spend it all — leave room for maintenance, savings, and life.
- A lower interest rate meaningfully increases what you can afford; shop multiple lenders.
- Don't forget property taxes and insurance — they can add hundreds to the monthly payment.
Frequently asked questions
What is the 28/36 rule?
It's a lender guideline: keep your housing payment under 28% of gross monthly income, and your total debt payments under 36%. Staying within both is a sign the loan is affordable.
How much income do I need to buy a house?
It depends on the price, your down payment, the interest rate, and your other debts. The calculator works backward from your income to a comfortable price range.
Does a bigger down payment let me afford more?
Yes. A larger down payment lowers your loan amount and monthly payment, and at 20% down you typically avoid PMI, freeing up budget for a higher price.