Buying
How Much House Can You Actually Afford?
By David Golovin · September 6, 2026 · 3 min read
Online calculators spit out a price. Lenders run different math, and your budget should run on a third version: what you can pay every month without wincing.
The number lenders actually use
Lenders qualify you on debt-to-income: your total monthly debt payments, including the new mortgage, divided by your gross monthly income. Depending on the loan program, they may approve up to roughly 43-50%. That ceiling is about what you can be approved for, not what feels livable.
The payment is more than the loan
The real monthly cost is principal, interest, property taxes, homeowners insurance, mortgage insurance if your downpayment is small, and HOA dues if the community has them. Taxes and insurance alone can add hundreds a month, and they keep rising after you buy. Price a home by its full payment, never by the sticker.
The rate matters more than the price
On a $360,000 loan, the principal-and-interest payment is about $2,275 at 6.5% and about $1,518 at 3%. That is roughly $750 a month, or $9,000 a year, from the rate alone. A $20,000 price cut cannot compete with that. It is why homes with assumable low-rate loans punch far above their list price.
A sane way to set your budget
Start from your take-home pay, subtract what you actually spend and save, and see what monthly payment fits. Then work backwards to a price range at today’s rates, and check whether an assumable listing gets you more house for the same payment.
FAQ
What debt-to-income ratio do lenders allow?
Many loans allow total debt payments up to roughly 43-50% of gross monthly income, depending on the program and your credit profile. Comfortable is usually closer to 36%. Approved and comfortable are not the same number.
Does a preapproval mean I can afford the house?
No. Preapproval is the maximum a lender will lend you, calculated from gross income before taxes, childcare, savings goals, or anything else you actually spend money on. Budget from your real monthly life, not the letter.
How does the interest rate change what I can afford?
Dramatically. On a $360,000 loan, the principal-and-interest payment is about $2,275 per month at 6.5% and about $1,518 at 3%. Same house, same loan amount, roughly $750 a month apart. That is why assumable low-rate loans stretch a budget further than a price cut.