How Much House Can You Really Afford?
There are two answers to "how much house can I afford?" — the number a lender will approve, and the number you can actually live with. They're rarely the same. Here's how the math works, what lenders check, and how to find the payment that won't wreck your budget.
The 28/36 rule
The oldest and still most reliable affordability benchmark is the 28/36 rule: keep housing costs under 28% of your gross monthly income, and your total debt under 36% (Amerisave).
"Housing" here means the full payment — principal, interest, property taxes, homeowners insurance, plus PMI and any HOA. "Total debt" adds your car loan, student loans, and credit-card minimums on top. The home affordability calculator works backward from these limits to a price.
A worked example
Say you earn $90,000 a year — $7,500 a month gross. Under the 28% rule, your housing payment should stay under about $2,100. Under the 36% rule, all your debt combined should stay under $2,700, so if you already pay $500 on a car and loans, that leaves roughly $2,200 for housing (Amerisave). Notice the lower of the two limits wins.
What lenders actually look at
Modern conventional loans often focus on your overall debt-to-income ratio (DTI) rather than the housing ratio alone, and many will stretch total DTI to 43–45% — sometimes higher with strong compensating factors like a big down payment or cash reserves (Amerisave). But just because a lender will approve you at 45% doesn't mean you should live there.
The four levers that move your number
- Income: more gross income raises every limit proportionally.
- Existing debt: every $100/mo of debt payment directly cuts your housing budget.
- Down payment: a bigger down payment lowers the loan and can eliminate PMI at 20%.
- Interest rate: at 2026's ~6%–7% rates, a single point can swing your affordable price by tens of thousands.
Don't forget the costs the rule hides
Property taxes and insurance vary wildly by location and can add hundreds a month. Maintenance runs roughly 1% of the home's value per year. And PMI applies until you reach 20% equity. Build these into your number — the calculator includes taxes and insurance so your estimate reflects the real monthly cost, not just principal and interest.
The bottom line
Start with the 28/36 rule, confirm the lender's DTI limit, then pick the payment that leaves room for savings and life — usually below the max you qualify for. Run your income, debts, and down payment through the home affordability calculator to see a realistic price before you start shopping.
Ready to run your own numbers?
Open the Home Affordability Calculator →