How Much House Can You Afford? A Practical US Guide
Working out how much house you can afford is less about the biggest loan a bank will approve and more about the payment you can comfortably live with. Lenders set the ceiling; your real life sets the sensible number, and the two are often far apart.
The 28/36 rule
A long-standing guideline says your housing costs should stay under about 28% of your gross monthly income, and your total debts, including the mortgage, under about 36%. So if you earn 6,000 a month before tax, aim to keep housing around 1,680 and all debt payments under roughly 2,160. Lenders use similar debt-to-income limits to decide what they will approve.
Costs beyond the mortgage
- Property taxes and homeowners insurance, often bundled into your monthly payment via escrow.
- Private mortgage insurance (PMI) if your down payment is under 20%.
- HOA fees, maintenance and repairs — budget roughly 1% of the home value per year for upkeep.
- Closing costs at purchase, commonly several percent of the loan amount.
Down payment and rate
A larger down payment lowers your loan, your monthly payment and often your interest rate, and it can remove PMI once you pass 20% equity. Even a small change in the interest rate moves your payment meaningfully over a 30-year loan, so shop lenders. Run the actual monthly number, including taxes and insurance, before you fall in love with a listing.
Should I borrow the maximum I qualify for?
Usually not. The maximum leaves little room for emergencies, savings or lifestyle. Many buyers are happier targeting a payment well below their approval limit, so the home funds the rest of life too.
How much should I put down?
20% avoids PMI and reduces your loan, but it is not mandatory — many loans allow less. Balance a bigger down payment against keeping a healthy emergency fund; do not drain your savings to hit 20%.
The bottom line
Affordability is about the payment you can comfortably carry, not the largest loan available. Use the 28/36 rule as a guide, budget for taxes, insurance and upkeep, and aim below your approval ceiling. Run your real numbers with our free affordability calculator before you start house hunting.