How Much House Can You Actually Afford?
Every affordability calculator, including ours, answers the same question: what will a lender approve? That's a useful number, but it isn't the question most people actually need answered. This is about the harder one — how much house should you choose to buy, given that the approved number is a ceiling, not a recommendation.
- Lenders count PITI. Actual ownership costs run roughly 23% higher once maintenance and utilities are included.
- On a $100,000 income, buying at 25% of income instead of the lender's 28% max means about $50,000 less house — and $250/month back in your pocket.
- That $250/month, invested over 30 years, is worth roughly $283,000.
- The right number depends on job stability, other goals, and how long you'll stay — not just what you qualify for.
The costs your approval number ignores
Lenders calculate affordability on PITI: principal, interest, taxes, and insurance. That's a real number, but it's not what owning a home costs. On a $400,000 home with 20% down at 6.5%:
Maintenance estimated at the common 1%-of-value-per-year rule; utilities at $250/month. Neither appears in any affordability calculation, yet together they add about 23% to what you actually pay each month.
This is the single biggest reason people feel squeezed after buying at their maximum. Nothing went wrong — the approval number simply never included these costs.
What buying below your maximum actually buys you
On a $100,000 household income, here's what different comfort levels translate to:
$359,270
The lender's typical maximum. Technically approvable, leaves little slack.
$309,830
A common conservative target. About $50,000 less house, $250/month freed up.
$227,428
Aggressive saving territory — meaningful tradeoff on house, large tradeoff freed up elsewhere.
~$283,000
What that $250/month becomes if invested at 7% over 30 years instead of spent on a bigger mortgage.
That last figure is worth sitting with. The gap between "maximum approved" and "comfortably affordable" isn't just monthly breathing room — over the life of a mortgage it's potentially a substantial share of a retirement account.
The questions that should actually set your number
Rather than defaulting to your approval limit, these tend to matter more:
- How stable is your income? Two stable salaries can responsibly carry a higher ratio than one commission-based income. Lenders don't distinguish; you should.
- How long will you stay? Buying costs 2–5% at closing and roughly 6–8% to sell. Under about five years, those transaction costs can outweigh the equity you build — which argues for buying less, not more.
- What else are you funding? Retirement contributions, childcare, education savings, or aging-parent support all compete with a mortgage payment and appear nowhere in the 28/36 calculation.
- What's your emergency fund? Homeownership introduces expenses renting doesn't — a failed HVAC system or roof repair arrives without warning. Buying at your maximum while holding a thin emergency fund is where most financial stress originates.
- Is the payment fixed? Your principal and interest are, but taxes and insurance aren't — both have risen sharply in many markets recently. Budget for a payment that grows somewhat over time, not one frozen at today's figure.
A practical way to test your number before committing
One approach that surfaces problems before they're expensive: for three months before buying, transfer the difference between your current housing cost and your proposed new monthly cost — including the maintenance and utility estimates above, not just PITI — into a separate savings account. Live on what remains.
If it's comfortable, you have real evidence rather than a projection. If it's tight, you've learned that for the price of three months' inconvenience instead of thirty years of it. And either way you've built up savings toward closing costs.
When buying at your maximum can make sense
It isn't always the wrong call. A few situations where stretching is defensible:
- Strong, predictable income growth — early-career professionals in fields with reliable salary progression may grow into a payment that's tight today.
- A genuinely constrained market — if inventory in your area is limited and prices are rising faster than you can save, waiting has its own real cost.
- Long time horizon — planning to stay 10+ years amortizes the transaction costs and gives appreciation time to work.
The distinction that matters: stretching as a deliberate, informed choice is very different from stretching because the approval letter said you could.
Where to go from here
Start with the mechanical number — what you'd actually be approved for — then work backward using the questions above to a figure you're comfortable with. Our affordability calculator covers the mechanics in detail: how the 28/36 rule is applied, what moves your maximum most, and where existing debt actually starts to bite. Running it at both your maximum and a more conservative target, side by side, tends to be more useful than either number alone.
How we verify this: figures on this page are computed from standard published formulas and checked against our own calculators. Assumptions are stated inline. Found an error? Let us know — see our editorial approach.