How Much House Can I Really Afford?

It’s the first question almost everyone asks me, and it’s the right place to start. Before you fall for a listing, you want to know the number that lets you sleep at night. Here’s how I help clients find theirs, in plain terms.

Start with the 28/36 rule

Most affordability advice traces back to one quiet piece of math. The 28/36 rule suggests keeping your housing costs near 28% of your gross monthly income, and all of your monthly debt combined under 36%.

Picture someone earning $10,000 a month before taxes. The rule points toward roughly $2,800 for housing, and about $3,600 once you fold in the car payment, student loans, and anything else owed each month. It’s only a guideline, and plenty of healthy budgets bend it a little. I still like it, because it quietly protects the rest of your life from your mortgage.

What lenders actually look at

When you apply, a lender weighs several things at once, but the one that carries the most weight is your debt-to-income ratio, or DTI. It’s your monthly debt payments divided by your income before taxes, and it tells a lender how much room you have left for a house payment.

A few other factors sit around that number. Lenders care how steady your income is, since salaried pay and self-employment income get read a little differently. They look at your credit, because a stronger profile usually earns better terms and lifts what you can comfortably carry. And they weigh your down payment and cash reserves, since more money down shrinks the loan while a cushion in the bank reassures everyone that a rough month wouldn’t sink you.

Here’s what surprises people most. A lender may approve you for a DTI well above 36%, sometimes as high as 43% or even 50%. What you qualify for and what will actually feel good to pay each month are rarely the same figure.

The costs the calculator forgets

Most online calculators only show principal and interest. Your real payment usually carries four pieces, which lenders shorten to PITI: the principal and interest on the loan itself, your property taxes, and your homeowner’s insurance, plus mortgage insurance if you put down less than 20%.

Then there’s everything that lives outside the payment. Homeowners association dues, utilities that cost less back when you rented, and general upkeep are all your responsibility now. A useful habit is to set aside about 1% of the home’s value each year for maintenance. On a $600,000 home, that’s around $6,000 a year for the water heater that eventually quits and the roof that eventually asks for attention.

Pre-approval shows your ceiling

Getting pre-approved is a genuinely useful step, and I encourage every serious buyer to do it. Just hold it in the right light. A pre-approval is the most a lender is willing to lend you, which is a very different thing from the amount that fits comfortably inside your life.

I’ve sat with clients who were approved for far more than they ever wanted to spend, and they were relieved when I told them to trust their own instinct. Buying below your ceiling leaves room for travel, for savings, for a slow season at work, and for the ordinary surprises of owning a home. That breathing room tends to be worth more than the extra square footage.

A simple way to find your number

If you’d like a starting point before we ever talk, try this. Add up your income before taxes, multiply it by 0.28 for a rough housing target, then by 0.36 for your total-debt ceiling. Subtract the payments you already carry each month from that second figure, and what remains is a realistic sense of what a house payment could be. Keep the cost of taxes and insurance tucked inside that number rather than adding them on afterward.

It won’t be exact, and it doesn’t need to be. What it does is turn a scary, open-ended question into something you can actually reason about.

The bottom line

How much house you can afford was never really one number from a calculator. It lives where two things meet: what a lender will approve, and what your budget can carry month after month without strain. The figure that honors both, and still leaves room for the life you want, usually sits a little under the maximum. There’s real freedom in choosing it.

Ready to learn more?

If you’re trying to pin down your number, I’d be honored to walk through it with you. We can look at your whole picture together and land on a budget that feels confident instead of stretched. Reach out any time; I’m always glad to help.