Mortgage · 6 min read
How Much House Can I Afford? A Realistic Guide
Learn the 28/36 rule, how down payment affects affordability, and why you should not max out your mortgage pre-approval amount.
The 28/36 rule
The classic affordability rule says your monthly housing costs should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%. These are lender guidelines, not personal guarantees that you will be comfortable.
Why pre-approval is not a budget
Lenders often approve you for more than you should spend. A pre-approval does not account for your savings goals, childcare, travel, hobbies, or job instability. Build your own budget first, then use the mortgage affordability calculator to find a safe price range.
The impact of down payment
A larger down payment reduces your loan amount, monthly payment, and often eliminates PMI. However, do not drain your emergency fund to buy a house. Keep 3-6 months of expenses in cash after closing costs.
Action step
Use the mortgage affordability calculator to enter your income, debts, down payment, and interest rate. Then subtract your current monthly expenses to see if the resulting payment feels comfortable.