Question 1

How much home can I afford on my salary?

Accepted Answer

As a general rule, lenders recommend that your total monthly housing costs — including mortgage, property tax, and insurance — should not exceed 28% of your gross monthly income. With the 36% DTI rule, your total debts (housing + other obligations) should stay below 36% of gross income. For example, on a $100,000 annual salary with no other debts, you could afford roughly $2,333 per month in housing costs, which translates to approximately a $350,000–$400,000 home depending on rates and down payment.

Question 2

What is the 28/36 rule for home buying?

Accepted Answer

The 28/36 rule is a widely used lending guideline. The "28" means your monthly housing expenses (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income. The "36" means your total monthly debt payments — housing plus car loans, student loans, credit cards, and other debts — should not exceed 36% of gross monthly income. Most conventional lenders use this as a qualification threshold, though some government-backed loans (FHA, VA) allow higher ratios.

Question 3

How does down payment affect how much home I can afford?

Accepted Answer

A larger down payment directly increases the home price you can afford without changing your monthly payment or loan amount. For example, with $50,000 saved for a down payment, if your maximum loan is $300,000, you can afford a $350,000 home. With $100,000 saved, the same loan supports a $400,000 home. Additionally, a down payment of 20% or more eliminates private mortgage insurance (PMI), saving $100–$300 per month on a typical home.

Question 4

Should I use my maximum affordability or buy below it?

Accepted Answer

Financial advisors consistently recommend buying below your maximum affordability. Just because you qualify for a $500,000 mortgage does not mean you should spend that much. Buying 10–20% below your maximum leaves room for savings, unexpected repairs, lifestyle expenses, and investment. The calculator shows your ceiling — use it as a cap, not a target.

Question 5

How do interest rates affect my home affordability?

Accepted Answer

Interest rates have a dramatic impact on affordability. For every 1% increase in mortgage rates, your buying power drops by roughly 10%. At 6%, a $2,000 monthly payment supports a $333,000 loan over 30 years. At 7%, the same payment supports only $300,000. At 8%, it drops to $272,000. This is why timing your purchase around rate movements — or locking in a lower rate — can mean tens of thousands of dollars in buying power.

Question 6

What costs beyond the mortgage should I budget for?

Accepted Answer

Beyond your mortgage payment, budget for property taxes (typically 1–2% of home value annually), homeowners insurance (0.3–1% annually), private mortgage insurance or PMI if your down payment is below 20% (0.5–1% of loan annually), home maintenance and repairs (1% of home value per year), and HOA fees if applicable ($200–$500+ per month). These can add $500–$1,500 per month to your housing costs.

Question 7

Can I afford a home if I have student loans?

Accepted Answer

Yes, but student loan payments reduce your maximum home affordability because they count toward the 36% DTI limit. For example, if you pay $400 per month in student loans, that is $400 less available for housing costs each month. On a 30-year mortgage at 7%, $400 less per month translates to roughly $60,000 less in borrowing power. Consider income-driven repayment plans to lower your monthly student loan payment before applying for a mortgage.

Home Affordability Calculator — How Much Home Can You Afford?