How Much House Can I Afford?
Lenders answer with two ratios, and the smaller one wins. Here is what each income actually qualifies for — and why the lender’s number is not your budget.
Published September 3, 2026
Lenders do not decide what you can afford by feel. They apply two ratios, and whichever produces the smaller number wins.
The two ratios
Front-end (28%) — housing costs alone, capped at 28% of gross monthly income. That includes principal, interest, property tax, insurance and any HOA fee: the whole payment, not just the mortgage.
Back-end (36%) — all monthly debt, capped at 36%. Housing plus car payments, student loans, credit card minimums, everything on your credit report.
Different loan programmes stretch these — FHA commonly allows more, and strong compensating factors can push a conventional loan higher — but 28/36 is the conservative benchmark most calculators use.
What that means in practice
Assuming $60,000 down, a 6.5% rate over 30 years, $400 of other monthly debts, 1.1% property tax and $1,800 a year of insurance:
| Income | Max price | Max payment | Loan |
|---|---|---|---|
| $75,000 | $273,476 | $1,750 | $213,476 |
| $100,000 | $354,076 | $2,333 | $294,076 |
| $150,000 | $515,277 | $3,500 | $455,277 |
Run your own numbers with the home affordability calculator.
Your other debts matter more than you think
On a $100,000 income, existing monthly debts change the answer sharply — and there is a threshold where the binding constraint switches from housing to total debt:
| Monthly debts | Max price | Which ratio binds |
|---|---|---|
| $0 | $354,076 | housing (28%) |
| $400 | $354,076 | housing (28%) |
| $800 | $335,653 | debt (36%) |
| $1,200 | $280,385 | debt (36%) |
Below about $500 of other debt, the 28% housing rule is what limits you and paying down a credit card changes nothing. Above it, every $100 of monthly debt you clear buys roughly $14,000 of house.
That is the single most actionable fact here: if the debt ratio is binding, paying off a car loan raises your budget more than saving another $10,000 of deposit.
What the rate does
Same $100,000 income, same $60,000 down:
| Rate | Max price |
|---|---|
| 5.0% | $398,643 |
| 6.0% | $367,911 |
| 6.5% | $354,076 |
| 7.0% | $341,165 |
| 8.0% | $317,845 |
Every full point costs roughly $27,000 of buying power. Which is why a rate quote is worth shopping for as hard as the house — half a point across three lenders is a real difference in what you can buy.
The number the lender gives you is not your budget
This is the part worth taking seriously. A lender's maximum is the point at which they are still comfortable being repaid. It is not the point at which your life still works.
What the ratios do not see:
- Maintenance. Budget 1% to 2% of the home's value annually. On a $350,000 house that is $290 to $580 a month that no ratio counted.
- Utilities, which usually rise with square footage.
- Furnishing a larger home, which arrives all at once.
- Childcare, retirement contributions, travel — none appear on a credit report, and all compete for the same money.
A common approach is to borrow 70–80% of the maximum and treat the difference as the margin that makes the house liveable rather than merely financed.
Beyond the down payment
The cash you need at closing is the down payment plus 2–5% in closing costs — on a $350,000 purchase, roughly $10,500 anywhere from $17,500. Lenders also want reserves left afterwards, often two to six months of payments.
See the down payment calculator for the full cash requirement, and the mortgage calculator for what a specific price actually costs each month.
The one thing to check before anything else
Get pre-approved, not pre-qualified. Pre-qualification is an estimate based on what you told them. Pre-approval means they pulled your credit and verified your income — which is what makes an offer credible, and what stops you looking at houses in a bracket you cannot actually reach.