How Much Mortgage Can I Afford? A Step-by-Step Guide to Finding Your Number

Q: Is the 28/36 rule a hard limit?

No — it is a guideline. FHA loans allow up to 31%/43%. Some lenders go higher. But the 28/36 rule is a good benchmark for what is affordable, not just what is approvable.

Q: How does my credit score affect how much I can afford?

Your credit score determines your interest rate. Someone with a 760 score might get 6.5%, while a 660 score might get 7.5%. On a $320,000 loan, that 1% difference costs an extra $215/month — or $77,000 over 30 years.

Q: Can I afford a mortgage if I have other loans?

Yes — as long as your total debt payments stay under 36% of gross income. If your car loan and student loans already push you over 36%, pay them down first or buy a less expensive home.

Q: What if interest rates drop after I buy?

You can refinance. However, refinancing comes with closing costs (2%–5% of the loan amount), so you need to stay in the home long enough for the savings to outweigh the costs.

Updated June 2026 · 8 min read

📑 Table of Contents

Buying a home is one of the biggest financial decisions you will ever make. And the first question everyone asks is: How much mortgage can I actually afford?

It is not just about what the bank says you qualify for. It is about what fits comfortably into your life — leaving room for savings, emergencies, and maybe a vacation or two. In this guide, we break down every factor that goes into answering that question, with real numbers, real rules, and a mortgage calculator to test your own numbers.

The 28/36 Rule: Where Lenders Start

Most conventional lenders use the 28/36 rule to determine how much mortgage you qualify for.

What the 28/36 Rule Means

Rule	What It Covers	Limit
28% Front-End Ratio	Your monthly mortgage payment (PITI: principal, interest, taxes, insurance)	Must not exceed 28% of your gross monthly income
36% Back-End Ratio	ALL monthly debt payments (mortgage + car loans + student loans + credit cards)	Must not exceed 36% of your gross monthly income

Example With Real Numbers

Let us say your household earns $8,000 per month gross (about $96,000 per year).

28% rule: $8,000 × 0.28 = $2,240 maximum for your mortgage payment (PITI)
36% rule: $8,000 × 0.36 = $2,880 maximum for total debt

If you already have a $350 car payment and $200 in student loans, that leaves:

$2,880 − $550 = $2,330 available for your mortgage

In this case, the 28% cap of $2,240 is the binding constraint.

Turn That Into a Home Price

Using our mortgage calculator with: $2,240 monthly budget (PITI, subtract ~$400 for taxes + insurance = ~$1,840 for principal + interest), 6.5% interest rate, 20% down payment, 30-year term.

That works out to roughly a $290,000 loan, meaning a home priced around $360,000 with a $72,000 down payment.

📊 Try Our Mortgage Calculator →

Other Factors That Affect How Much You Can Afford

The 28/36 rule is a starting point. Real life has more variables.

1. Your Down Payment Size

A larger down payment reduces your loan amount, which lowers your monthly payment — and eliminates PMI (Private Mortgage Insurance) if you reach 20%.

Down Payment	Loan Amount (on $400k home)	PMI?
5% ($20,000)	$380,000	Yes (~$200-$300/month)
10% ($40,000)	$360,000	Yes
20% ($80,000)	$320,000	No

PMI alone can add hundreds to your monthly cost — money that builds zero equity for you.

2. Interest Rates Change Everything

A 1% difference in your interest rate can change your buying power by tens of thousands.

Rate	Monthly Payment (P&I on $320,000)	Home Price at $1,840/mo Budget
5.5%	$1,817	~$385,000
6.5%	$2,022	~$360,000
7.5%	$2,237	~$325,000

The takeaway: When rates rise, your buying power drops — even if your income stays the same. Use the mortgage calculator to compare rates side by side.

3. Property Taxes and Insurance Vary by Location

The mortgage calculator shows principal and interest (P&I). But your actual monthly payment includes:

Property taxes: Typically 1%-2% of home value per year. On a $360,000 home, that is $300-$600/month.
Homeowners insurance: Roughly $80-$150/month for a standard policy.
HOA fees: If applicable, $100-$500+/month depending on the community.

4. Your Other Financial Goals Matter

Just because a bank approves you for $400,000 does not mean you should borrow $400,000. Ask yourself:

Am I still able to contribute 15%+ to retirement?
Do I have a 3-6 month emergency fund after the down payment?
Will I still have money to travel, save for kids' college, or handle unexpected repairs?

If the answer to any of these is "no," buy less house than the maximum.

Step-by-Step: Calculate Your Own Number

Here is exactly how to find your affordable mortgage number in 5 minutes.

Step 1: Know Your Gross Monthly Income

Add up all pre-tax household income. Include salaries, bonuses (use a conservative average), and any consistent side income.

Step 2: Apply the 28% Cap

Multiply your gross monthly income by 0.28. That is your maximum total housing payment (PITI).

💡 Example

$7,000/month × 0.28 = $1,960

Step 3: Subtract Estimated Taxes and Insurance

Pro tip: assume about 1.5% of the home price for annual taxes + $1,200/year for insurance. Convert to monthly.

For a $350,000 home: ($350,000 × 1.5% + $1,200) ÷ 12 ≈ $538/month

Now: $1,960 − $538 = $1,422 available for principal and interest.

Step 4: Plug Into the Calculator

Enter your P&I budget, down payment, current interest rate, and preferred term into the mortgage calculator. It will tell you the exact loan amount and home price you can afford.

Step 5: Check the 36% Back-End Ratio

Add up all monthly debts (car, student loans, credit card minimums, personal loans). Total debts + mortgage must stay under 36% of gross income.

Beyond the Mortgage: What Else You Need to Budget

Closing costs, moving expenses, and immediate repairs can catch first-time buyers off guard.

Expense	Typical Cost	Notes
Closing costs	2%-5% of home price	Includes appraisal, title insurance, lender fees
Moving	$500-$3,000+	Depends on distance and volume
Immediate repairs	$2,000-$10,000	Even "move-in ready" homes need something
Furniture/appliances	$2,000-$10,000	Unless the home comes fully furnished

Bottom line: Add 5%-10% of the home price on top of your down payment to cover these costs.

Rent vs. Buy: Making the Final Decision

If you are unsure whether buying is the right move at all, use our Rent vs. Buy Calculator to compare total costs side by side over any time period. If you plan to stay in the same place for fewer than 5 years, renting is often the smarter financial choice.

Frequently Asked Questions

How much mortgage can I afford with a $100,000 salary?▼

At $100,000/year ($8,333/month gross), the 28% rule caps your housing payment at about $2,333/month. At 6.5% interest with 20% down on a 30-year fixed mortgage, that translates to roughly a $370,000 loan — or a home priced around $460,000. Run your exact numbers with our mortgage calculator.

What happens if I put down less than 20%?▼

You will pay PMI (Private Mortgage Insurance), typically 0.5%–1% of the loan amount per year. On a $320,000 loan, that is $133–$267/month. PMI automatically cancels once you reach 20% equity (or 22% for automatic termination). You can also request cancellation earlier.

Is the 28/36 rule a hard limit?▼

No — it is a guideline conventional lenders follow. FHA loans allow up to 31%/43%. Some lenders go higher. But the 28/36 rule is a good benchmark for what is affordable, not just what is approvable. Stretching beyond it increases your risk of becoming house-poor.

Should I pay off debt before buying a home?▼

Yes, especially high-interest debt. Credit card debt at 20%+ APR should be eliminated before saving for a down payment. Student loans at 4–6% are less urgent. Use our Debt Payoff Calculator to build a payoff plan.

How does my credit score affect how much I can afford?▼

Your credit score determines your interest rate, which directly impacts your monthly payment. Someone with a 760 score might get 6.5%, while someone with a 660 score might get 7.5%. On a $320,000 loan, that 1% difference costs an extra $215/month — or $77,000 over 30 years. A Loan Calculator can help you compare rates.

Can I afford a mortgage if I have other loans?▼

Yes — as long as your total debt payments (mortgage + all other loans) stay under 36% of gross income. If your car loan and student loans already push you over 36%, pay them down first or buy a less expensive home. The 36% cap exists to protect you, not the bank.

What if interest rates drop after I buy?▼

You can refinance. A refinance replaces your current mortgage with a new one at a lower rate. However, refinancing comes with closing costs (2%–5% of the loan amount), so you need to stay in the home long enough for the savings to outweigh the costs. Use the mortgage calculator to compare your current loan against a refinanced one.

Quick Summary

Factor	Rule of Thumb
Maximum mortgage payment (PITI)	28% of gross monthly income
Maximum total debt	36% of gross monthly income
Down payment target	20% to avoid PMI
Budget for closing/moving	5%–10% of home price
Emergency fund	3–6 months of expenses after down payment
Interest rate impact	1% rate change = ~10% change in buying power