How much house can I actually afford?

Buying a home is one of the most exciting milestones in life but it also comes with a lot of big questions. One of the most common things people ask me when they start thinking about buying is:

“How much house can I actually afford?”

It’s a great question, and the truth is the answer isn’t the same for everyone. Your budget depends on several factors like your income, existing debt, interest rates, and how much you plan to put down.

As a Realtor working with buyers here in Texas, this is something I talk about almost every day. The good news is there are some simple guidelines lenders use to help determine a comfortable price range. Once you understand how those work, the process starts to feel a lot less mysterious.

Quick Answer

Most lenders determine affordability using something called the 28/36 rule. This guideline suggests that your monthly housing expenses should stay around 28% of your gross monthly income, and your total monthly debt payments should stay under about 36% of your income. Factors such as your credit score, interest rates, down payment, and property taxes will also influence how much home you can comfortably afford.

Let’s walk through the details so you can see how it all works.

The Basic Rule Lenders Use

When lenders evaluate how much house someone can afford, they often use something called the 28/36 rule.

This guideline suggests that your monthly housing expenses should generally stay around 28% of your gross monthly income, and your total monthly debt payments should stay under about 36% of your income.

Housing expenses include more than just the mortgage payment. They typically include:

• Principal and interest

• Property taxes

• Homeowners insurance

• HOA dues (if applicable

By looking at these numbers, lenders can get a clearer picture of your financial health and determine whether a mortgage payment will fit comfortably within your overall budget.

Key Factors That Determine Affordability

Several factors influence how much house you may be able to afford.

Income

Your earnings help determine the starting point for what lenders may be willing to loan.

Monthly Debt

Existing obligations such as car loans, student loans, and credit card payments affect your debt-to-income ratio.

Credit Score

A higher credit score can help you qualify for better interest rates, which can significantly lower your monthly payment over time.

Down Payment

A larger down payment can reduce the amount you need to borrow, which may lower your monthly payment and overall interest costs.

Interest Rates

Mortgage interest rates play a big role in affordability. Even a small change in rates can shift how much home you can comfortably purchase.

Property Taxes and Insurance

These are part of your total monthly housing cost and vary depending on the property and location.

Hidden Costs Buyers Should Consider

Many first-time buyers focus only on the mortgage payment, but there are a few additional costs that come with homeownership.

Property Taxes

These vary by location and can significantly impact your yearly housing costs.

Homeowners Insurance
Insurance protects your home and investment but adds to your monthly expenses.

Maintenance and Repairs
Owning a home means planning for routine upkeep and occasional repairs.

HOA Fees
If the property is in a community with shared amenities, homeowners association fees may apply.

Closing Costs
These typically range from 2–5% of the home’s purchase price and are paid when the transaction is finalized.

Planning for these expenses ahead of time helps buyers avoid surprises later.

Example Scenario

Let’s look at a simple example.

Imagine a household earning $90,000 per year, which equals about $7,500 per month before taxes.

Using the 28% guideline, their monthly housing budget might be around $2,100 per month. Depending on interest rates, property taxes, insurance, and their down payment, that monthly payment could translate to a home price somewhere around $300,000 to $350,000.

Of course, every situation is different, which is why speaking with a lender can help give you a clearer picture of your personal budget.

Why Pre-Approval Matters

One of the most helpful steps a buyer can take early in the process is getting pre-approved for a mortgage.

A pre-approval allows a lender to review your financial information—such as income, debt, and credit—and estimate how much you may qualify to borrow. This gives you a realistic understanding of your price range and also shows sellers that you are a serious buyer.

Many buyers find that once they have a pre-approval in hand, their home search becomes much more focused and less stressful.

Helpful Advice for Buyers

While lenders may approve you for a certain loan amount, it’s important to choose a home that fits comfortably within your lifestyle and long-term financial goals.

Just because you qualify for the maximum amount doesn’t always mean you should stretch your budget that far. Leaving room for savings, travel, home maintenance, and life’s unexpected expenses can make homeownership much more enjoyable.

Buying a home should feel exciting not financially overwhelming.

Final Thoughts

Understanding how much house you can afford is one of the most important first steps in the homebuying process. Once you have a clear idea of your budget, the entire journey becomes much easier to navigate.

If you're beginning to explore buying a home and want to better understand your options, I’d be happy to help guide you through the process and connect you with trusted lenders who can help you determine your buying power.

Having the right information, and the right team, can make all the difference in finding a home that truly fits your life.

Related Questions Buyers Often Ask

Do you need 20% down to buy a house?
No. While putting 20% down can help buyers avoid private mortgage insurance (PMI), many loan programs allow buyers to purchase a home with much less. Some conventional loans allow as little as 3–5% down, and certain government-backed loans may allow even lower down payments depending on eligibility.

What credit score do you need to buy a home?
Most lenders look for a credit score of at least 620 for a conventional mortgage, although requirements vary depending on the loan program. Higher credit scores can help buyers qualify for better interest rates.

What is mortgage pre-approval?
Pre-approval is when a lender reviews your financial information, such as income, debt, and credit estimates how much they may be willing to lend you. Having a pre-approval letter helps buyers understand their budget and shows sellers they are serious about purchasing.

How long does it take to buy a house?
The homebuying process can vary, but once a buyer has a property under contract, closing typically takes about 30–45 days, depending on financing, inspections, and other factors.