🏠 How Much House Can You Afford?

Knowing how much house you can afford is the first step toward buying with confidence. Your budget depends on your income, monthly debts, down payment, and current mortgage rates. Here’s how to estimate your buying power before starting your home search.

✅ The 28/36 Rule for Home Affordability

Lenders use the 28/36 rule to determine what’s affordable:

  • 28% — Your total housing costs (mortgage, taxes, insurance) should be no more than 28% of your gross income.
  • 36% — Your total debt payments (including car loans and credit cards) should stay under 36% of your income.

For example, if you earn $6,000 per month, your ideal housing budget is around $1,680 per month.

💡 Factors That Affect What You Can Afford

  • Down payment: A larger down payment lowers your monthly mortgage.
  • Interest rate: Even a small rate change can impact buying power.
  • Loan term: A 15-year mortgage saves interest but increases monthly payments.
  • Debt-to-income ratio (DTI): Lenders evaluate how much of your income goes toward existing debt.

Use these numbers to fine-tune your budget before shopping for homes.

📊 Quick Affordability Formula

A simple way to estimate affordability:

Monthly Income × 0.28 = Target Housing Payment

Include property taxes, insurance, HOA dues, and PMI if applicable. Use an online mortgage calculator to compare fixed vs adjustable-rate scenarios.

For flexible financing, learn how an ARM could save you thousands.

🏡 Found the right home and ready to make it yours?

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