How Much House Can I Afford?

When a lender decides how much to hand you, they mostly look at two ratios.

The first is your front-end ratio — your housing payment as a share of your gross monthly income. Lenders often allow this to go up to around 28%. The second is your back-end ratio — all your debt payments, housing included, as a share of gross income. That one can stretch to 43% or higher on some loan programs.

Here's the catch. Both of those use your gross income — your pay before taxes, before health insurance, before your 401(k), before anything actually hits your account. And neither one knows what you spend to live. A lender doesn't care that you have a kid in daycare, a $400 car payment, or that you'd like to keep saving. It only cares whether you'll most likely keep paying the mortgage.

So a bank might cheerfully approve you for a payment that, on paper, "fits" — and would quietly drain every dollar of breathing room you have. That's how people end up house-rich and cash-poor, one busted water heater away from a credit card spiral.

The honest version of this calculation starts somewhere different. It starts with the money you actually receive.

Take your monthly take-home pay — what lands in your account after taxes and deductions. That's the real pool everything comes out of. Then subtract the things that come out no matter what:

• Existing debt payments. Student loans, car payments, credit card minimums, anything with a monthly bill attached.
• Living expenses. Food, transportation, utilities, subscriptions, the ordinary cost of being alive.
• Savings you actually want to keep doing. This is the one almost every calculator ignores. If buying a house means you stop saving entirely, you haven't bought a house — you've bought a very large source of stress.

Whatever is left after all of that is your real housing budget. Not your gross income times some ratio. The actual dollars you can point at a mortgage without your month falling apart.

That's the number this calculator is built around. You enter your take-home pay, your debts, your living expenses, and your savings goal, and it works out the housing payment that leaves your budget intact — then backs into the largest loan that payment can carry at your rate and term.

Say your take-home pay is $6,500 a month.

You've got $600 in debt payments (a car and a student loan), about $2,500 in living expenses, and you'd like to keep setting aside $500 a month toward savings and emergencies.

Now here's the part people miss: that $1,900 isn't all "mortgage." Your monthly housing payment also includes property taxes, home insurance, possibly PMI, and maybe HOA fees. Those can easily eat $400–$600 of that number before a single dollar goes to the loan itself.

So the principal-and-interest portion you can comfortably carry might be closer to $1,300–$1,500 — which translates to a meaningfully smaller loan than a lender's 28% rule would have suggested off your gross pay. That's not a disappointment. That's the calculator doing its job.

There's no single magic ratio, but a useful way to think about it is in tiers based on what's left over after your full housing payment, debts, and living costs:

• Comfortable — you still have a healthy cushion each month for savings, surprises, and the occasional good time. A repair or a slow month doesn't rattle you.
• Moderate — it works, but it's snug. You're probably saving less than you'd like, and an unexpected bill means a tense month.
• Stretched — the payment fits only if nothing goes wrong, and something always eventually goes wrong.

Aim for comfortable. The whole point of running the numbers honestly is so that owning the home feels like the win it's supposed to be, instead of a monthly reminder of how thin the margins are.

When you're estimating your full payment, don't stop at principal and interest. The pieces that catch people off guard:

• Property taxes. Vary wildly by location — anywhere from well under 1% of the home's value per year to over 2%. Check your county assessor's site for the real rate.
• Home insurance. Often $1,000–$2,000 a year, higher in flood, fire, or hurricane zones. More on estimating both →
• PMI. Required when your down payment is under 20%. Usually 0.5%–1.5% of the loan annually. Full guide to PMI →
• HOA fees. A fixed monthly cost on many properties that never builds equity.
• Maintenance. Not part of the mortgage, but real. A rough rule is 1% of the home's value per year.

A payment that looks affordable on principal alone can look very different once these are stacked on. Better to see the whole number now than to discover it in month two.