What is the 28/36 rule?

A budgeting guideline: keep housing costs under 28% of gross monthly income, and total debt payments under 36%. It’s a starting point, not a hard limit.

How much should I put down on a house?

A 20% down payment is a common target because it usually avoids private mortgage insurance, but many loans allow less. A larger down payment lowers your monthly payment and total interest.

Does the loan calculator include taxes and insurance?

No — it calculates principal and interest only. Add property tax, insurance, and maintenance separately when setting your real budget.

How Much House Can I Afford? A Simple Guide

Before you fall in love with a listing, it helps to know what you can actually afford. A few simple rules of thumb — and a mortgage calculator — will get you a realistic number in minutes.

The 28/36 rule

Lenders and financial planners often use the 28/36 rule as a starting point:

28% — your monthly housing costs (mortgage, property tax, insurance) shouldn’t exceed 28% of your gross monthly income.
36% — your total monthly debt payments (housing plus car loans, student loans, credit cards) shouldn’t exceed 36%.

If you earn $6,000 a month gross, that’s roughly $1,680 for housing and $2,160 for all debt combined. These aren’t hard limits, but going far beyond them is how budgets get stretched thin.

Estimate the monthly payment

Once you have a target monthly payment, you can work backwards to a loan amount. Our Loan Calculator lets you plug in a loan amount, interest rate, and term to see the monthly principal-and-interest payment, total interest, and total cost. Adjust the loan amount until the monthly figure fits comfortably inside your 28% housing budget.

Don’t forget the down payment

Your loan amount is the home price minus your down payment. A larger down payment means a smaller loan, a lower monthly payment, and less interest paid over the life of the mortgage. Putting down 20% also typically lets you avoid private mortgage insurance (PMI), an extra monthly cost.

The costs buyers forget

The mortgage payment is only part of the picture. Budget for:

Property taxes — vary widely by location.
Homeowner’s insurance — required by lenders.
Maintenance — a common rule is 1% of the home’s value per year.
Closing costs — often 2–5% of the purchase price, paid upfront.
HOA fees, if applicable.

Why interest rate matters so much

On a 30-year mortgage, even a one-percentage-point change in the interest rate can swing your monthly payment by hundreds of dollars and add tens of thousands in total interest. It’s worth running a few scenarios in the Loan Calculator at different rates to see the impact — and to understand the role interest plays over decades.

A quick worked example

Say you can comfortably afford $1,600/month for principal and interest, rates are around 6.5%, and you want a 30-year loan. Plugging those into the calculator points to a loan of roughly $253,000. Add your down payment to get your target home price — then layer in taxes, insurance, and maintenance to pressure-test the budget.