How Much House Can You Really Afford?
Lenders will often approve you for more than you should spend. Here's how to find a number that fits your life, not just the bank's formula.
Start with the 28/36 rule
A long-standing guideline says housing should stay at or below 28% of your gross monthly income, and all debt payments at or below 36%. Multiply your monthly income by 0.28 for a comfortable housing ceiling.
It's a guideline, not a law — but it keeps you from being 'house poor', where the mortgage leaves nothing for everything else.
Budget from take-home, not gross
The 28/36 rule uses gross income, but you live on take-home pay. Run your salary through a take-home estimate first, then sanity-check that the monthly payment leaves room for savings, retirement and life.
Don't forget the hidden costs
The mortgage is only part of it. Budget for property tax, insurance, maintenance (roughly 1% of the home's value a year), HOA dues, utilities and closing costs. These turn a 'just affordable' payment into a stretch.