Understanding Home Affordability
Affordability is more than just the maximum loan a bank will approve. It is the price point that lets you cover the mortgage, save for retirement, handle emergencies, and still enjoy life. Most lenders apply the 28/36 rule: housing costs no more than 28% of gross monthly income, and total debt payments no more than 36%.
What "Monthly Debts" Includes
Lenders count minimum payments on credit cards, car loans, student loans, personal loans, child support, and any other recurring obligation that appears on your credit report. They do not count utilities, groceries, streaming subscriptions, or health insurance premiums deducted from your paycheck.
Why the Conservative Number Matters
Maxing out your approval amount is risky. Property taxes rise, insurance jumps after claims, and HOA fees increase. Targeting 80–85% of your maximum gives a safety margin for repairs and life changes. Buyers who follow this guideline are far less likely to become "house poor."
Boost Your Buying Power
Three levers move the number the most: increase your down payment, pay off a car loan or credit card before applying, and improve your credit score to lock in a lower rate. Even a 0.5% rate reduction can add tens of thousands to your affordable price.