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How much house can I afford?

Use our mortgage calculator to figure out your budget

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Buying a house

Owning a home is an important goal for many people, and homeownership means different things for different buyers — getting your very own keys gives you a place to settle down or raise a family or create lasting memories.

But this goal can be a daunting one because there is a lot of contradictory advice about how much money you should put down or how much house you can actually afford on your income. We make the process easier with a useful mortgage calculator and tips to make your homebuying dream a reality.

Key insights

  • As a general rule of thumb, your mortgage payment should not exceed 28% of your gross monthly income.
  • Lenders prefer a debt-to-income ratio of 36% or lower before approving buyers.
  • In addition to the mortgage payment, you must also consider other home expenses, such as property taxes, insurance and maintenance costs.

Mortgage calculator

Understanding how much you can afford to spend on your next home requires looking at multiple variables, including your loan term, mortgage interest rate, down payment and property taxes in your area. Use the ConsumerAffairs mortgage affordability calculator below to discover what house price you can realistically afford.

Mortgage Calculator
My Annual Income
10% of home price
Estimated property tax: %
You can afford a house up to:
Alternatively, you may consider lowering your monthly payments using the slider above to find a home price that more comfortably fits your current situation.

Find out your income-to-mortgage ratio

You want your mortgage to fit comfortably in your budget — not be a constant stress. Don’t rely on a lender to tell you how much you can borrow, since this number can often be higher than how much you should comfortably take out.

» MORE: What is “house poor?”

The one-third principle
Your annual income should be at least a third of what your mortgage is, according to Larry Steinhouse, a seasoned real estate investor and financial author. The Federal Deposit Insurance Corporation (FDIC) also suggests most people can afford a mortgage with two or three times their household income.

“Let's say you make $100,000 a year; a lot of mortgage companies will run numbers and max out the amount of money you can actually afford — most likely $350,000 to $400,000. I think that’s too high,” Steinhouse said in a Zoom interview with ConsumerAffairs.

In other words, if your total household income is $100,000, your mortgage should be no more than $300,000.

The 28/36 rule is a general guideline used by lenders to determine the maximum amount of debt that a borrower can comfortably afford. The rule states:
  • A borrower's mortgage payment should not exceed 28% of their gross monthly income
  • Their total debt payments (including the mortgage, credit cards, car loans and other debt obligations) should not exceed 36% of their gross monthly income.

For example, if a borrower's gross monthly income is $7,000, their mortgage payment should not exceed $1,960 (28% of $7,000), and their total monthly debt payments should not exceed $2,520 (36% of $7,000).

The 28/36 rule is not a hard-and-fast rule, and lenders may have their own guidelines or consider additional factors when evaluating a borrower's ability to repay a mortgage. However, it is a useful benchmark to help borrowers estimate how much house they can afford and how much debt they can comfortably take on.

Other factors that determine your mortgage limit

Banks and mortgage lenders look at a range of factors when deciding how much you can qualify for, including your credit profile, existing debts and income. Your eligibility for the lowest rates also depends on your financial profile.

Credit score

Your credit score plays a significant role in determining the mortgage rate you qualify for. The biggest mistake first-time homebuyers make is not knowing how much they can qualify for with their credit score, according to Steinhouse. You usually need a FICO score of 580 to 620 (or better).

Most lenders consider scores in the mid-to-upper-600s good for buying a house. Generally, the better your score, the better your interest rate.

Income and debt

Your debt-to-income (DTI) ratio refers to how much of your income goes to paying off existing debts. The way lenders see it, the more you have to pay toward debts, the less you have to put into your house payment. Ideally, you want a DTI ratio of under 36%.

» MORE: What is a good debt-to-income ratio for a mortgage?

Down payment

Your down payment is the amount of cash you have saved up to pay upfront toward your new house. The more money you put down, the less you’ll need to finance and the lower your monthly payment will be. You may also qualify for a better interest rate with a higher down payment.

For conventional loans, putting 20% or more down allows you to waive private mortgage insurance (PMI).

» MORE: How much should you put down on a house?

Rates and points

With mortgage points, you get a “trade-off between your upfront costs and your monthly payment,” according to the Consumer Financial Protection Bureau. In other words, you pay points upfront in exchange for a lower rate. One point equals 1% of the loan amount.

Additional costs and fees

Aside from your down payment, don’t forget about closing costs and other fees associated with buying a house, like homeowners insurance — which will be required if you’re taking out a mortgage. Be sure to budget for other expenses, such as homeowners association dues and the costs of planned maintenance and upkeep (lawn care, pest control, etc.).


Whether to rent or buy a home depends on your personal financial situation, lifestyle and goals. Renting may be more affordable in the short term, but buying a home can provide long-term financial benefits such as building equity and stability. It's important to consider your financial goals and evaluate the costs and benefits of renting versus buying before making a decision.
While buying a home with poor credit is not impossible, it definitely makes the process harder, since you have to find a lender who will approve you. If homeownership is your goal, spend a year or two to rebuild your credit and save for a down payment.
An FHA loan does come with more flexible lending requirements, such as a 500 to 580 minimum credit score and a DTI ratio of 43% or less. However, how much mortgage you can afford still depends on your income and budget.

Bottom line: How much mortgage can you afford?

There isn’t one factor that determines how much house you can afford. You’re getting a good deal as long as the numbers make sense: “If you’re paying the same or less than you were in rent, it’s fine. If it's more, that may be a problem,” Steinhouse said.

Knowing how much you can afford on a monthly house payment is an excellent first step. However, your total mortgage payment will be made up of more than just the principal loan amount; you'll need to factor in interest, taxes and insurance to get a clear picture of your future mortgage payments.

Mortgage calculator methodology

For the calculator, we used the 28% rule and the following assumptions to determine whether a home's price is affordable:

  • Private mortgage insurance: PMI is assessed by banks to help cover risks associated with home loans for buyers who make smaller down payments. We assume a 1% annual PMI fee for home purchases with less than 20% down for this calculator. If you make a down payment greater than or equal to 20%, we do not include PMI costs.
  • Homeowners insurance: According to the National Association of Insurance Commissioners, the average annual premium for the most common type of homeowners insurance in the U.S. is $1,249. For most homeowners, the annual costs for a homeowners insurance policy are around 0.35% of the home price. Check with your insurance agent for a more personalized estimate.

Article sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

  1. Steinhouse, Larry. Zoom interview. November 22, 2021.
  2. Federal Deposit Insurance Corporation, “How Much Mortgage Can I Afford?” Accessed April 11, 2023.
  3. National Association of Insurance Commissioners, “Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2018.” Accessed April 11, 2023.
  4. Consumer Finance Protection Bureau, “What are (discount) points and lender credits and how do they work?” Accessed April 11, 2023.
  5. Consumer Finance Protection Bureau, “What is the difference between a mortgage interest rate and an APR?” Accessed April 11, 2023.
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