Real estate affordability

How much house can I actually afford?

Your pre-approval measures the largest loan you're unlikely to default on. That's a ceiling, not a target — and the gap between the two is the part of your life that stays yours.

See what a rate costs

Last reviewed 16 September 2026

The short answer

Lenders apply the 28/36 rule: housing under 28% of gross monthly income, all debt under 36%. On a $90,000 salary that's $2,100 and $2,700. At a 6.76% rate with 10% down, that supports roughly a $274,000 home including taxes, insurance and PMI.S1

Two caps, and the lower one wins

This is the part most guides skip. You get two limits, not one, and which of them binds depends on your other debt — not on your income.

Which cap limits you

$90,000 salary · $7,500 gross monthly

28% versus 36% caps on a $90,000 salary 28% housing cap $2,100 available for housing ← this one binds 36% total-debt cap $500 debt $2,200 left for housing The 28% test is stricter here, so $2,100 is the real budget — the $2,200 figure is irrelevant. Pay off the car and the 36% cap rises to $2,700, but 28% still holds you at $2,100. Which cap binds flips once other debt passes $600/month.
Illustrative example, not a personalized figure. The 28/36 rule is lender convention; actual underwriting limits are higher. Fannie Mae permits up to 50% total debt-to-income through Desktop Underwriter.S4

The 43% rule you've read about is obsolete. The CFPB removed that cap from the General Qualified Mortgage definition in 2021, replacing it with a price-based threshold.S3 Lenders set their own limits now — and they're higher than most buyers expect. That's precisely why the approval ceiling and the sensible number have drifted so far apart.

Principal and interest is the smallest part of the bill

Budget against the mortgage payment alone and you'll be several hundred dollars short of reality every month. Taxes, insurance and mortgage insurance routinely add 25–35% on top.

What a $2,100 payment is actually made of

$274,299 home · 10% down · 6.76% 30-year fixed

Monthly payment composition $1,603 Principal & interest 76% of the payment $343 Tax + insurance $154 PMI PMI vanishes at 20% equity. The other two never do — and tax and insurance rise over time.
PMI estimated at 0.75%/yr of the loan balance, the midpoint of the 0.46%–1.50% range.S5 Tax and insurance at 1.5% of value annually is a national approximation; a Texas or New Jersey buyer should assume materially more.

Shopping the rate pays better than negotiating the price

Buyers fight hard over $5,000 of sale price, then accept a quarter point without blinking. On a $400,000 loan a quarter point runs about $34 a month and roughly $12,000 over the loan's life.

Lifetime interest on a $400,000 loan

30-year fixed, held to term

Lifetime interest by interest rate 5.76%6.26% 6.76%7.26%7.76% $441,260$487,570 $534,939$583,311$632,629 today Every half point is worth roughly $48,000 over thirty years. Three lenders on the same day is the highest-paid hour of the process.
Freddie Mac PMMS 30-year average, week of 10 September 2026: 6.76%.S1 Assumes the loan is held to term; most borrowers refinance or sell sooner, which lowers the absolute figures but not the ranking.

Five steps, in order

  1. Take 28% of your gross monthly income

    Write it down before you look at a single listing. This is your target for everything — mortgage, tax, insurance, HOA, PMI.

  2. Add up every other monthly debt payment

    Car, student loans, card minimums. Not groceries or childcare — lenders don't count those, though your budget should.

  3. Find which cap binds

    Subtract that debt from 36% of your income. Whichever number is lower — that or the 28% figure — is your real budget.

  4. Get three Loan Estimates on the same day

    Rates move daily, so quotes from different weeks aren't comparable. The Loan Estimate is standardized, which is what makes comparison possible at all.

  5. Decide your own number, separately

    Whatever the lender approves, choose what you actually want to spend. The gap is the point.

Related questions

Does a bigger down payment always win? Financially it's efficient, but PMI isn't permanent — you can request cancellation at 80% loan-to-value and it terminates automatically at 78%.S15 A smaller down payment now with PMI gone in a few years often beats waiting years longer to save.

What if I'm self-employed? Lenders average two years of returns and use net income after deductions. Aggressive write-offs cut your taxable income and your borrowing capacity together. Model both before you file.

Can I count on refinancing later? Plan the payment you can carry at today's rate. A refinance is an option, not a plan — buyers who stretched in 2021 assuming rates would stay low are the cautionary set.