· mortgage, home buying, finance
How Much House Can I Afford? A Practical Guide
The 28/36 rule, down payment math and the hidden costs of homeownership — how to size a mortgage you can actually live with.
House affordability is less about the maximum a bank will lend you and more about the payment that fits your life. Lenders typically use two guardrails, known together as the 28/36 rule.
The 28/36 rule
- Housing costs (principal, interest, taxes, insurance) should stay under 28% of gross monthly income.
- Total debt payments — housing plus car loans, student loans and credit cards — should stay under 36%.
On a $90,000 salary ($7,500/month gross), 28% is about $2,100 per month for total housing cost. That's not just principal and interest: property taxes and insurance come out of the same budget.
Don't forget the hidden costs
- Property taxes: often 1–2.5% of home value per year.
- Homeowners insurance: varies widely by region.
- Maintenance: budget roughly 1% of the home's value annually.
- HOA fees, if applicable — they compound monthly.
A larger down payment reduces your loan amount and can eliminate private mortgage insurance (PMI), which typically runs 0.5–1% of the loan per year until you reach 20% equity. Try different scenarios in our mortgage calculator to see exactly how rate and down payment change the monthly number.