Everyone wants the dream house. The problem? Dreams don’t come with price tags, but mortgage lenders definitely do. And “how much can I afford?” is where most people start lying to themselves.
Let’s fix that with some real numbers and zero fluff.
The 28/36 Rule: Your Starting Line
Lenders typically want your housing expenses — mortgage, insurance, property taxes, HOA — under 28% of your gross monthly income. Your total debt payments? Under 36%.
So if you make $6,000 a month before taxes, aim to keep housing costs below $1,680. Total debt including the house? Below $2,160.
These aren’t hard ceilings, but they’re solid guardrails. Some lenders go higher, especially with great credit. But just because they’ll approve it doesn’t mean you should spend it.
Do the Back-of-Napkin Math
Take your gross annual income and multiply by 3. That’s a rough max for your home price with a decent down payment. Make $80,000 a year? Think around $240,000.
For a tighter, more conservative estimate, multiply by 2.5. That gives you breathing room for life’s surprises — and trust me, they come.
This is napkin math, not gospel. But it stops you from browsing $500,000 listings when you should be looking at half that.
Factor in the Real Monthly Payment
People obsess over the purchase price and forget what actually leaves their account every month. Principal and interest are just the beginning.
Property taxes vary wildly by location. Insurance depends on the house and your credit score. HOA fees can add hundreds. And if you put less than 20% down, PMI joins the party.
That “affordable” $300,000 house might cost $2,400 a month all-in. Can your budget handle that? Be real with yourself.
Don’t Forget the Hidden Stuff
New houses need furniture. Old houses need repairs. Yards need mowers, driveways need shoveling, and every single thing that breaks is now your problem.
Budget 1% of your home’s value annually for maintenance. On a $250,000 house, that’s over $200 a month you should be setting aside. Not spending it? Great, you’ve got an emergency fund.
The Down Payment Reality Check
Twenty percent down avoids PMI and gets you better rates. But in 2026, that’s a massive pile of cash. FHA loans let you in with 3.5%, conventional with 3%.
Just know that smaller down payments mean bigger monthly payments. Run both scenarios. See what your bank account can actually sustain.
Stress-Test Your Budget
Before you commit, try living on your proposed mortgage payment for three months. Put the difference between your current rent and future mortgage into savings.
If it hurts, if you’re stressed, if you’re skipping nights out just to make it work — that’s valuable data. Better to learn now than after you’ve signed 30 years of your life away.
Look, affordability isn’t about what a lender says yes to. It’s about what lets you live your life without constant financial anxiety. Buy less house than you can afford. I know that sounds boring, but boring is how you build wealth. And wealth beats a fancy address every single time.