How Much House Can I Afford? (The Honest Answer Based on Your Salary)

Everyone has an opinion on how much house you can afford. Your bank will approve you for the maximum they can legally lend. Your real estate agent wants you buying at the top of your budget. Your parents have advice based on 1990s interest rates. And online articles give you a number that has nothing to do with your actual income, debts, or goals.

The truth is there's no single "right" answer - but there's a clear framework for finding *your* right answer. This guide walks through the three most widely used affordability rules, shows you how lenders calculate what they'll approve you for, and helps you figure out what you can actually afford without stretching yourself to the breaking point.

What "Affording" a House Really Means

There's a critical difference between what a lender will approve you for and what you can comfortably afford. Lenders look at your gross income and total debt obligations. They don't account for your childcare costs, how aggressively you're saving for retirement, your student loan payments, or how much you spend on groceries.

Being "house poor" - owning a home you technically qualify for but can't afford in practice - is one of the most common financial mistakes in America. According to a 2024 Harvard Joint Center for Housing Studies report, nearly 40% of US homeowners spend more than 30% of their gross income on housing costs, a threshold widely considered financially stressful.

The goal isn't to buy the most house your bank will lend you. It's to buy the most house that fits your life.

How to Calculate How Much House You Can Afford - Step by Step

There are three numbers you need to work through in sequence.

Step 1: Apply the 28% front-end ratio rule

Your total monthly housing costs - principal, interest, property taxes, and insurance (PITI) - should not exceed 28% of your gross monthly income.

* *Example:* If you earn $90,000/year, your gross monthly income is $7,500.

Step 2: Apply the 36% back-end ratio rule (the full picture)

Your total monthly housing costs *plus* any existing recurring debt payments (student loans, car payments, credit cards, child support) should not exceed 36% of your gross monthly income.

* *Example:* Continuing with the $90,000/year salary ($7,500/month gross). Assume you have a $400/month car payment and $200/month in student loans ($600 total monthly debt).

In this case, both rules yield $2,100/month. But if your debt were higher (say, $800/month), your back-end limit would restrict your housing budget to $1,900/month. Lenders will always default to the *lower* of the two limits.

Step 3: Factor in the "Lender vs. Real Life" Gap

Lenders use *gross* (pre-tax) income, but you live on *net* (take-home) income.

If you gross $7,500/month, your take-home pay is likely around $5,400 after taxes, healthcare, and 401(k) contributions. A $2,100 mortgage payment represents a massive 39% of your take-home pay.

For a comfortable budget, many financial planners recommend the 25% take-home rule: keeping your housing costs below 25% of your actual net monthly pay (which would be $1,350 in this example).

Worked Example: Three Incomes, Three Budgets

To see how these rules play out across the country, let's look at three different income profiles assuming a standard 30-year fixed mortgage at 6.9% interest (a realistic mid-2020s rate environment):

Household A - $65,000/year in Columbus, Ohio

* Gross monthly income: $5,417

* 28% PITI limit: $1,517/month

* Existing debt payments: $350/month (car loan)

* Remaining for housing: $1,517/month (governed by front-end ratio as the back-end limit of $1,950 minus $350 is $1,600)

* P&I budget (after $250 taxes/insurance estimation): $1,267/month

* Estimated loan amount: ~$187,500

* With 5% down: max home price ≈ $197,000

* *Columbus median home price (2025):* ~$295,000 - a stretch at this income without a significant down payment or income growth.

Household B - $110,000/year in Atlanta, Georgia

* Gross monthly income: $9,167

* 28% PITI limit: $2,567/month

* Existing debt payments: $500/month

* P&I budget (after $400 taxes/insurance estimation): $2,167/month

* Estimated loan amount: ~$320,700

* With 10% down: max home price ≈ $356,000

* *Atlanta median home price (2025):* ~$410,000 - within reach with a slightly higher down payment or a partner's income added.

Household C - $175,000/year in Denver, Colorado

* Gross monthly income: $14,583

* 28% PITI limit: $4,083/month

* Existing debt payments: $900/month

* P&I budget (after $600 taxes/insurance estimation): $3,483/month

* Estimated loan amount: ~$515,500

* With 20% down: max home price ≈ $644,000

* *Denver median home price (2025):* ~$585,000 - comfortably within range.

Home Affordability by Annual Income

*Assumes 30-year fixed at 6.9% interest, $350/month estimated taxes and insurance. Does not account for personal debt limits.*

Common Mistakes to Avoid

* Focusing only on the monthly payment: Do not forget transaction costs (2%-5% of the home price in closing fees) and ongoing maintenance (set aside 1%-2% of the home's value annually).

* Borrowing to your maximum limit: Lenders approve you for a worst-case scenario. Always build in a buffer.

* Ignoring the impact of interest rates: A 1% increase in rates reduces your buying power by roughly 10% for the exact same monthly payment.

The Bottom Line

Determining what you can afford isn't a one-time calculation. Start with the 28/36 rule as your absolute ceiling, adjust downward to fit your take-home pay, and always account for the secondary costs of ownership.

Model your unique numbers in under 30 seconds using our free Home Affordability Calculator.