The question is not how much a bank will lend you — it is how much you can comfortably afford without your home becoming a burden. A lender's maximum often stretches you to the limit; a sensible budget leaves room to live. The most-used guideline for finding that sensible number is the 28/36 rule.
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The 28/36 rule
It is two limits in one:
- 28% — housing. Your total monthly housing cost (mortgage payment, property tax, and insurance) should stay at or below 28% of your gross monthly income.
- 36% — total debt. All your monthly debt payments combined — housing plus car loans, student loans, and minimum card payments — should stay at or below 36% of gross income.
The first limit keeps your home affordable; the second keeps your overall debt load manageable. Lenders use similar ratios, but the 28/36 rule is a conservative target you set for yourself.
A worked example
Say your household earns $6,000 a month before tax:
| Step | Amount |
|---|---|
| Gross monthly income | $6,000 |
| 28% housing budget | $1,680/mo |
| Less ~$300 taxes & insurance | $1,380/mo for principal & interest |
| Loan that payment supports (6.5%, 30 yr) | ~$218,000 |
| With a 20% down payment, home price | ~$273,000 |
So on a $6,000 monthly income, a home in the region of $270,000 keeps you within the 28% guideline. Change the rate, the down payment, or your income and the number moves — which is exactly what the Mortgage Calculator shows instantly, taxes and insurance included.
What "affordable" really includes
The mortgage payment is only part of the cost of owning. A realistic budget also accounts for:
- Property tax and home insurance — usually collected with your payment.
- Private mortgage insurance (PMI) — often required if you put down less than 20%.
- HOA or maintenance fees where they apply.
- Upkeep — a common rule is to budget around 1% of the home's value per year for repairs.
A home that fits the mortgage but leaves nothing for these is not truly affordable.
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The down payment changes everything
A larger down payment lowers the loan, the monthly payment, and the home price you can reach — and at 20% it usually removes PMI. But draining every last saving into a down payment is risky: keep an emergency fund intact. The right balance funds the down payment and leaves a cushion.
How to find your number
- 1. Calculate 28% of your gross monthly income — that is your housing ceiling.
- 2. Subtract estimated taxes and insurance to find your principal-and-interest budget.
- 3. Work backward to a loan amount and price using the calculator.
- 4. Sanity-check the 36% total-debt limit with your other obligations.
- 5. Leave room for maintenance, savings, and life.
The bottom line
What you can afford is not the bank's maximum — it is the payment that fits comfortably inside your life. Use the 28/36 rule as your ceiling, include taxes, insurance and upkeep, protect your emergency fund, and run real numbers before you fall in love with a listing.
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Frequently asked questions
What is the 28/36 rule?
A budgeting guideline for home buying: keep total housing costs at or below 28% of gross monthly income, and all debt payments combined at or below 36%. It is a conservative target that helps ensure a mortgage stays comfortable.
How much should I put down on a house?
A 20% down payment typically avoids private mortgage insurance and lowers your payment, but many loans allow far less. A bigger down payment helps — as long as you keep an emergency fund intact rather than draining all your savings.
Is the bank's maximum the same as what I can afford?
No. Lenders often approve more than is comfortable. Their maximum is based on ratios and your credit; what you can truly afford also factors in maintenance, savings goals, and the lifestyle you want to keep.
What costs come on top of the mortgage payment?
Property tax, home insurance, possibly PMI and HOA fees, plus ongoing maintenance — often budgeted at roughly 1% of the home's value per year. A realistic affordability estimate includes all of these, not just principal and interest.