How much home can you really afford?
The listing price is only part of the story. Here's how to look at the full picture so your mortgage payment fits comfortably in your life — not just on paper.
Beyond the price tag
Your monthly housing cost is more than principal and interest. It typically includes property taxes, homeowners insurance, and — if your down payment is under 20% on a conventional loan — mortgage insurance. Add in utilities, maintenance, and HOA dues where they apply, and the "real" monthly cost of a home is often noticeably higher than the number on the listing.
The 28/36 rule
A common rule of thumb: aim to keep your housing payment under about 28% of your gross monthly income, and all debt payments combined (housing, car loans, student loans, credit cards) under about 36%. Lenders use a version of this to determine how much they'll lend you, but it's worth checking for yourself first — a payment your lender approves isn't always one that leaves you room to breathe.
| Monthly gross income | 28% housing guideline |
|---|---|
| $4,000 | $1,120 |
| $6,000 | $1,680 |
| $8,000 | $2,240 |
Down payment and loan programs
Your down payment affects both your monthly payment and which loan programs you qualify for. Conventional loans can go as low as 3% down for qualifying buyers, though you'll typically carry PMI until you reach 20% equity. FHA loans require around 3.5% down. VA and USDA loans can offer 0% down for eligible buyers. Each comes with different tradeoffs in rate, insurance, and eligibility.
Use our affordability calculator to compare Conventional, FHA, VA, and USDA side by side — it updates your minimum down payment and monthly insurance automatically for each.
Don't forget closing costs
On top of your down payment, plan for closing costs — typically 2–5% of the purchase price — covering things like loan origination, title insurance, appraisal, and prepaid taxes and insurance. Ask your lender for a loan estimate early so this number doesn't catch you off guard right before closing.
Build in a cushion
Once you own, you're responsible for every repair — there's no landlord to call. Many first-time buyers aim to keep 3–6 months of expenses in savings after closing, separate from what you use for the down payment, so a broken water heater doesn't turn into a financial emergency.
See your real numbers
Run your price, down payment, and loan program through our calculator.
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