How Much House Can I Afford? Rules of Thumb Explained

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The 28/36 rule

Many lenders like your total housing payment (principal, interest, property tax and insurance) to be under about 28% of gross monthly income, and all debt payments under about 36%. On $8,000 a month gross, that's roughly $2,240 for housing.

These are guidelines, not hard limits – loan programs and lenders differ.

Down payment and PMI

20% down usually avoids private mortgage insurance on conventional loans. Less than 20% is common, but PMI (often 0.3-1.5% of the loan per year) is added to the monthly payment.

Don't forget the hidden costs

Property tax, homeowners insurance, HOA fees, maintenance (a common rule is 1-2% of the home's value per year) and closing costs (often 2-5% of the price).

Test the numbers

Enter a price, down payment, rate, term, tax and insurance into the Mortgage Calculator to see the full monthly payment, then compare it with 28% of your income.

Frequently asked questions

Is this financial advice?

No – it's general information. Talk to a licensed lender or adviser about your situation.

Does a bigger down payment help?

Yes – a smaller loan, lower payment and often no PMI.

Should I use gross or take-home pay?

Lenders use gross income; budgeting with take-home pay is more conservative.