How much house can you afford?
Lenders will often approve more than is comfortable. The 28/36 rule is a conservative starting point; the real number depends on your other debts, savings and how stable your income is.
The 28/36 rule
Keep housing costs at or below 28% of gross monthly income and total debt payments at or below 36%. On $8,000 gross monthly income that means $2,240 for mortgage principal, interest, property tax and insurance, and no more than $2,880 in total monthly debt. Many lenders will go to a 43–50% debt-to-income ratio for qualified buyers — approval is not the same as affordability.
What counts in housing cost
Principal and interest, property taxes, homeowners insurance, mortgage insurance if the down payment is under 20%, and HOA dues. On a $400,000 loan at 6.5% for 30 years, principal and interest is about $2,528 a month; taxes and insurance can easily add several hundred more, and those costs rise over time even when the mortgage payment does not.
The down payment
Twenty percent avoids private mortgage insurance and gives the lowest payment, but it is not mandatory: many loan programmes allow 3–5% down for qualified buyers. A smaller down payment means mortgage insurance, a higher payment and less equity — model both with the down-payment calculator before deciding.
The costs buyers forget
- Closing costs (2–5% of the loan) and moving costs
- Maintenance and repairs, often 1% of the home's value a year
- Higher utilities, HOA special assessments and property-tax reassessment
- An emergency fund that survives the purchase — do not spend it all on the down payment
Set the budget before the search
Decide the monthly payment you can carry through a job loss or a rate reset, subtract the taxes/insurance/HOA estimate, and work backwards to a purchase price. Then get pre-approved: it tells you what a lender will actually offer, which is useful information — not a spending target.
Frequently asked questions
What is the 28/36 rule?
Housing costs no more than 28% of gross monthly income and total debt payments no more than 36%. It is a conservative budget guide, not a lending rule.
How much down payment do I need?
Twenty percent avoids mortgage insurance and lowers the payment, but many programmes allow 3-5% down for qualified buyers.
Do lenders approve more than I can afford?
Sometimes. Approval is based on debt-to-income limits and credit; your own budget should also cover savings, maintenance and irregular expenses.
Where to go next
/mortgage-affordability/ · /down-payment-calculator/ · /rent-vs-buy/
Written and maintained by the Calculators data team · last reviewed 2026-10-24 · sources and methodology.