How much house can I actually afford?

Ignore the bank's number. Use the 28/36 rule and add up the real cost of owning.

6 min read · Updated 2026-07-04

The bank's number is a ceiling, not a target

A lender will pre-approve you for whatever debt-to-income ratio their guidelines allow — often 45–50%. That number does not include groceries, childcare, saving for retirement, or the fact that houses need $8,000 furnaces every 15 years.

The 28/36 rule

Keep total housing cost — mortgage principal, interest, property tax, homeowners insurance, and HOA — at or under 28% of gross monthly income. Keep total debt payments (housing plus everything else) at or under 36%. Above 36% you are house-poor by definition.

The costs the ad never shows

Budget 1–2% of home value per year for maintenance and repairs, plus one-time closing costs of roughly 2–5% of the loan amount, plus property tax that can rise faster than your income. In many U.S. states, insurance has doubled in five years — check the current quote in your ZIP code before you make an offer.

Key takeaways

Run the numbers

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Educational content only. Not individualized financial, tax, or legal advice.