Start with a payment, not a price
It is tempting to shop by home price, but affordability is really about the monthly payment and how it fits the rest of your budget. Work backward: decide what you can comfortably pay each month for housing, then translate that into a price using today's mortgage rate, your down payment, and estimated taxes and insurance. Our home affordability calculator does this for you, and the mortgage calculator shows the full payment behind any price.
The 28/36 rule
The most widely used guideline is the 28/36 rule. Your total housing payment, principal, interest, taxes, and insurance, should stay at or below 28% of gross monthly income, and all of your debt payments combined should stay at or below 36%. Lenders lean on these ratios to decide how much to lend. Staying comfortably under them, rather than right at the limit, leaves room to save for retirement, handle emergencies, and absorb the real costs of owning a home.
Your down payment changes everything
A larger down payment shrinks the loan, lowers the monthly payment, and, at 20% or more, removes private mortgage insurance while often improving your interest rate. That means a bigger down payment raises the price you can afford for the same monthly budget. But do not drain your emergency fund to reach 20%, keeping a cash cushion matters more. Try different down payments in the calculator to see how each moves your affordable price.
Don't forget the true cost of owning
A mortgage payment is not the whole story. Property taxes and homeowners insurance are usually bundled into the payment, but maintenance, repairs, utilities, and any HOA dues are on top. Budget roughly 1% of the home's value a year for upkeep, more for older homes. Buyers who plan only for the loan often feel squeezed once these bills arrive, so build them into your number from the start.
What lenders check besides income
Two people with the same salary can qualify for very different loans. Beyond income and debts, lenders weigh your credit score (which sets your rate), your down payment, and your cash reserves after closing. Improving your score and paying down a card or car loan before applying can meaningfully raise your buying power. Check your debt-to-income ratio first, since it is often the real limit on how much you can borrow.
Get pre-approved before you shop
A pre-qualification is a rough estimate; a pre-approval is a verified, conditional commitment for a specific amount that makes your offer far stronger with sellers. Getting pre-approved also tells you your true budget and rate, so there are no surprises late in the process. Treat any online estimate as a starting point, then confirm it with a lender before you fall in love with a house.
Calculators for this topic
Frequently asked questions
How many times my income can I afford for a house?
With typical rates and debts, many buyers land near three to five times gross income, but the 28/36 rule is a better guide because it accounts for your other debts and the current rate.
Is it better to put 20% down?
Twenty percent avoids private mortgage insurance and lowers your rate, but many buyers put down less. Put down what you can without draining your emergency fund.