How Much House Can I Afford? Rules, Ratios & Calculator
Use the 28/36 rule, debt-to-income ratios, and real numbers to find a home price you can actually afford.
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Key Takeaways
- 1The 28% rule: housing costs should not exceed 28% of gross monthly income.
- 2The 36% rule: total debt payments should not exceed 36% of gross income.
- 3Pre-approval amounts are ceilings, not targets — buy below your max.
- 4Budget for maintenance, closing costs (2–5%), and moving expenses.
Lenders may approve you for more than you should comfortably spend. Affordability is not just what a bank allows — it is what lets you save, handle emergencies, and enjoy life without house-poor stress.
Start with our mortgage calculator to translate income into a realistic price range.
The 28/36 Rule Explained
Spend no more than 28% of gross monthly income on housing (PITI). Total debt payments including car loans and student debt should stay under 36%.
Example: $10,000/month gross income → max $2,800 housing, $3,600 total debt. If you have $600 in other debt, housing budget is $3,000.
Down Payment and Cash Reserves
20% down avoids PMI and strengthens offers. But draining every dollar for a down payment leaves no buffer — keep 3–6 months of expenses in an emergency fund.
Closing costs run 2–5% of the purchase price. On a $400,000 home, budget $8,000–$20,000 beyond the down payment.
Buy Below Your Max
Pre-approval is a ceiling, not a goal. Buying at 80% of your approved amount leaves room for rate increases, repairs, and lifestyle spending.
Compare renting vs buying at your target price with our rent vs buy calculator before making an offer.
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