How Much House Can I Afford?
Published August 23, 2026 / 7 min read
The short answer
Most lenders work from the 28/36 rule: housing costs at or below 28 percent of gross monthly income, and all debt payments together at or below 36 percent. On a household income of 8,000 dollars a month that is about 2,240 dollars for housing and about 2,880 dollars for every debt payment combined.
That is the ceiling a lender will lend to, not a target. The number that matters to you includes property tax, insurance, private mortgage insurance, HOA dues, utilities, and maintenance budgeted at roughly one percent of the home value a year. Price a full payment in the mortgage payment calculator before you decide what you can carry.
Where the 28/36 rule comes from
The two ratios are underwriting shorthand that grew out of decades of mortgage lending experience. The first, sometimes called the front end ratio, compares your housing payment to gross monthly income. The second, the back end ratio, compares all recurring debt payments to the same income figure. Loan programs vary and plenty of approvals go above these thresholds with compensating factors such as a large down payment, strong reserves, or a high credit score. The rule survives because it is a rough but durable marker of where default risk starts climbing.
Two details are easy to miss. Both ratios use gross income, before tax and before payroll deductions, so a 28 percent housing ratio is a considerably larger share of what actually lands in your account. And the housing figure is not just principal and interest. It is the full PITI package: principal, interest, taxes, and insurance, plus HOA dues where they apply.
What debt to income actually measures
Debt to income divides your monthly debt obligations by your gross monthly income. On the debt side it counts the minimum payments a credit report shows: car loans, student loans, personal loans, credit card minimums, and the housing payment on the loan you are applying for. It usually does not count utilities, phone bills, groceries, insurance outside the escrowed homeowners policy, childcare, or the money you send to a brokerage account.
So the ratio is a measure of contractual obligations against income. It is not a measure of how much slack you have. Two households with identical debt to income can have wildly different real world margins, because one has two children in daycare and the other has none. The ratio is a useful screen, and a poor budget.
Why lenders and borrowers often disagree
A lender is answering one question: how likely is this loan to be repaid? It underwrites documented income and documented debts, and it is protected further by the collateral itself. A borrower is answering a much broader question: what does this payment do to everything else I want? Retirement contributions, tuition, travel, a career change, or simply the ability to absorb a bad month never appear in the underwriting file.
That is why a pre approval often lands well above the number people are comfortable with. The approval is not wrong and it is not a recommendation. It is the outer edge of what a lender will accept, and treating it as a shopping target is how buyers end up house rich and cash poor.
The costs people forget
Property tax
Rates vary enormously by state and by county, and the bill is assessed on the property value rather than on your loan. It typically rises over time and it does not stop when the mortgage is paid off. On a high tax property it can rival the interest portion of an early payment.
Homeowners insurance
Required by lenders and usually escrowed with the payment. Premiums have moved sharply in several regions, and coverage for wind, hail, or flood may sit in separate policies. Quote the actual address rather than using a national average.
Private mortgage insurance
With a conventional loan and less than 20 percent down, PMI is added to the payment. It protects the lender, not you. It generally falls away as the loan amortises toward 80 percent of the original value, and can often be removed sooner on request once you can demonstrate the equity. Until then it is a real line item.
HOA dues and maintenance
HOA dues are contractual and can be raised, and special assessments happen. Maintenance is the cost buyers most consistently leave out. Budgeting roughly one percent of home value a year is a rough planning figure rather than a promise: a 400,000 dollar home implies about 4,000 dollars a year, or 333 dollars a month set aside. Some years you spend nothing and then a roof arrives.
What you qualify for versus what you should spend
A practical way to close the gap is to work backward from your own cash flow instead of forward from an approval letter. Start with take home pay. Subtract what you already commit to savings and retirement, subtract the real recurring costs a lender never sees, and see what remains. Then compare that remainder to a full PITI plus HOA plus maintenance figure rather than to a principal and interest quote.
Stress testing helps too. Run the payment at a rate a point higher than you were quoted, since a rate lock can expire and an adjustable loan can reset. Ask whether the payment still works on one income, or with a higher insurance premium, or after a tax reassessment. If the answer is only yes under perfect conditions, the price is doing the work that a budget should be doing.
None of this produces a single correct number, and it is not meant to. The ratios give you a boundary, the full cost picture gives you a realistic payment, and the decision about how much of your income to commit to a house is a personal one that depends on job stability, family plans, and your own tolerance for a tight month. A mortgage broker, fee only financial planner, or housing counsellor can look at your actual situation in a way an article cannot.