How Much Mortgage Can I Afford?

Buying a home is one of the biggest financial decisions you’ll make, and knowing how much mortgage you can afford is the first step toward smart homeownership. While there’s no one-size-fits-all answer, many financial experts recommend that your monthly mortgage payment—including principal, interest, taxes, and insurance—should not exceed 28% to 31% of your gross monthly income.

Of course, what you can afford depends on your income, current debts, lifestyle, and long-term financial goals. Before falling in love with a home, it’s important to understand your full financial picture.

How to Calculate Your Monthly Mortgage Budget

To estimate how much house you can afford, start by calculating 28% to 31% of your gross monthly income (your income before taxes and deductions). For example, if you earn $6,000 per month before taxes, a reasonable mortgage payment might range from $1,680 to $1,860 per month.

But that’s just the beginning. Mortgage affordability also depends on:

• Your monthly debts (car loans, student loans, credit card payments, etc.)

• Property taxes and homeowners insurance

• Your down payment amount

• Loan term and interest rate

• Homeowners association (HOA) fees, if applicable

Use our mortgage calculator to input your income, debts, interest rate, and loan term to see what kind of mortgage fits your budget. Don’t forget to leave room in your budget for maintenance, utilities, and unexpected home expenses.

What is the 28/36 Rule?

The 28/36 rule is a widely recommended guideline used by lenders to determine mortgage affordability. It breaks down like this:

• 28% of your gross monthly income should be the maximum for your monthly mortgage payment (including principal, interest, taxes, and insurance).

• 36% should be the maximum for your total monthly debt payments, including your mortgage and all other debts.

This rule helps ensure that you’re not overextending yourself and that you’ll have enough cash flow left over for savings, retirement, and daily living expenses.

How Does Our Mortgage Affordability Calculator Work?

Our Mortgage Calculator is designed to help you estimate how much home you can afford by factoring in your income, debts, interest rate, and loan term. Here’s how it works:

1. Input your gross monthly income: This is your income before taxes or deductions.

2. Enter your estimated monthly debts: Include credit cards, car loans, student loans, etc.

3. Adjust the loan term and interest rate: These affect how much you’ll pay over time.

4. Review your estimated monthly mortgage payment: The calculator will show how much you can comfortably afford based on the 28/36 rule.

Final Thoughts on Mortgage Affordability

This calculator is a helpful starting point—but it’s just a guide. The best mortgage budget for you depends on your personal goals, lifestyle, and comfort level with long-term debt. If you prefer to travel often, build your savings faster, or keep your monthly obligations lower, consider shopping for a home well below your maximum budget. On the other hand, if you plan to stay in your home long-term and want to invest more in your living space, you might be comfortable on the higher end of the affordability range.

Before you begin house hunting, take a few minutes to run the numbers. A well-planned budget will help you find a home that fits your lifestyle—without stretching your finances too thin.