How Much House Can You Afford? Breaking Down the Budget

How Much House Can You Afford? Breaking Down the Budget

House hunting is exciting—but before falling in love with that dreamy front porch or open-concept kitchen, it’s essential to know what you can actually afford. Buying a home is one of the biggest financial commitments you’ll make, and getting your budget right from the start can save you a lot of stress down the road.

Start with the 28/36 Rule

A good rule of thumb: your monthly mortgage payment shouldn’t exceed 28% of your gross monthly income, and your total monthly debt payments (including car loans, student loans, credit cards, etc.) shouldn’t go over 36%. This helps lenders—and you—determine a manageable monthly payment.

Don’t Forget the Extras

Beyond the mortgage, be sure to factor in:

• Property taxes
• Homeowners insurance
• Private mortgage insurance (PMI), if your down payment is under 20%
• HOA fees (if applicable)
• Utilities & maintenance costs

These can add several hundred dollars to your monthly expenses.

How Much Should You Put Down?

While 20% down is ideal, many buyers qualify with as little as 3-5% down depending on the loan type. Just remember: the less you put down, the higher your monthly payments—and the more you may pay in interest over time.

Get Pre-Approved

One of the smartest first steps? Get pre-approved by a lender. This gives you a clear picture of what you can borrow—and makes your offer stronger when you’re ready to buy.

Bottom line: Knowing your budget before you shop helps you focus on homes that truly fit your lifestyle and finances. If you’re unsure where to begin, a local real estate agent or lender can help walk you through the process step by step.