How Much House Can You Really Afford?

Buying a home is one of the biggest financial decisions you’ll ever make—and it starts with one crucial question: How much house can you really afford? Whether you're a first-time buyer or looking to upgrade, knowing your financial limits can help you avoid costly surprises down the road.

1. Start With Your Monthly Budget

Before looking at listings, evaluate your monthly income and expenses. A common rule of thumb is that your total housing costs—mortgage, taxes, insurance, and HOA fees—should not exceed 28% to 30% of your gross monthly income.

2. Understand the 28/36 Rule

Lenders often use the 28/36 rule:

• 28% of your gross income for housing expenses

• 36% of your gross income for total debts (including credit cards, car loans, and student loans)

This helps determine how much you can borrow while staying financially comfortable.

3. Factor in the Down Payment

The more you can put down upfront, the less you’ll need to borrow, and the lower your monthly payments will be. A 20% down payment is ideal to avoid private mortgage insurance (PMI), but many programs allow as little as 3% down.

4. Don’t Forget Hidden Costs

Beyond the mortgage, owning a home includes:

• Property taxes

• Home insurance

• Utilities

• Maintenance and repairs

• Potential HOA fees

These recurring costs can add up quickly, so make sure they’re part of your affordability calculation.

5. Get Pre-Approved

A mortgage pre-approval gives you a clear idea of your borrowing power—and shows sellers you’re serious. It’s based on your income, credit score, debts, and down payment, giving you a realistic price range for your search.

Final Thoughts

Homeownership is a major milestone—but it shouldn’t stretch your finances too thin. By understanding how much house you can truly afford, you can shop with confidence, avoid stress, and enjoy your new home with peace of mind.