How Much House Can I Really Afford?
One of the first—and most important—questions I get from home buyers is: “How much house can I actually afford?”
It’s a great question, and the answer goes beyond just what a lender says you qualify for.
What Lenders Look At
When you get pre-approved for a mortgage, lenders focus on a few key factors:
- Your income
- Your credit score
- Your existing debt
- Your down payment
They use this information to determine your borrowing limit. But here’s the catch: that number is often the maximum you can borrow—not necessarily what you should spend.
What You Should Consider
Your comfort level matters just as much as the numbers on paper. Monthly homeownership costs include more than your mortgage:
- Property taxes
- Homeowners insurance
- Utilities
- Maintenance and repairs
- HOA fees (if applicable)
A good rule of thumb is to make sure your monthly payment still leaves room for your lifestyle—travel, savings, dining out, and unexpected expenses.
The 28/36 Rule (A Helpful Guide)
Many financial experts suggest:
- No more than 28% of your gross monthly income on housing
- No more than 36% on total debt
This isn’t a strict rule, but it’s a helpful starting point when planning your budget.
Don’t Forget Upfront Costs
In addition to your down payment, you’ll also need to budget for:
- Closing costs (typically 2–5% of the home price)
- Inspections and appraisals
- Moving expenses
These can add up quickly, so planning ahead is key.
Why Pre-Approval Still Matters
Even though you shouldn’t base your entire budget on your max approval, getting pre-approved is still an important first step. It helps you:
- Understand your price range
- Strengthen your offer
- Move quickly when you find the right home
My Advice as a Realtor
I always tell my clients: just because you can spend a certain amount doesn’t mean you should. The goal is to find a home you love and feel financially comfortable in.
The right home isn’t just about price—it’s about peace of mind.
If you’re starting your home search and want help understanding your numbers, I’m always happy to walk you through it and connect you with trusted local lenders.