Can I Afford This House? 🏠

How Much House Can I Afford Based on My Income?

The standard guideline is the 28% rule: your total monthly housing cost — mortgage principal and interest, property taxes, and homeowner's insurance — should not exceed 28% of your gross monthly income. If you earn $7,000/month before tax, your total housing payment should stay under $1,960/month. Going above this threshold makes it harder to save, handle unexpected expenses, or absorb any income disruption.

Most lenders also apply the 36% rule: your total debt payments — mortgage plus car loans, student loans, and credit card minimums — should stay under 36% of gross monthly income. Even if your mortgage alone fits within 28%, heavy other debt can still make you ineligible or put you in a financially fragile position.

What Income Do You Need to Afford Different Home Prices?

These estimates assume a 30-year mortgage at 7% interest, 10% down payment, and typical property tax and insurance costs:

• $150,000 home — ~$1,100/month. Minimum income: ~$47,000/year
• $250,000 home — ~$1,700/month. Minimum income: ~$73,000/year
• $350,000 home — ~$2,300/month. Minimum income: ~$99,000/year
• $500,000 home — ~$3,200/month. Minimum income: ~$137,000/year

These are minimums. Being at the ceiling of what you qualify for leaves no financial cushion. Most advisors recommend targeting a home where your housing costs are 20–25% of income, not at the 28% limit.

The Hidden Costs of Buying a House

First-time buyers consistently underestimate how much homeownership costs beyond the mortgage payment. Before you buy, make sure your budget accounts for all of these:

• Property taxes — 0.5–2.5% of home value per year, paid monthly via escrow
• Homeowner's insurance — typically $100–$200/month depending on location and coverage
• PMI (Private Mortgage Insurance) — required if your down payment is under 20%, adds $50–$250/month
• HOA fees — $50–$500+/month for condos and many newer developments
• Maintenance and repairs — budget 1% of home value per year; a $300,000 home means $3,000/year or $250/month set aside
• Closing costs — 2–5% of the purchase price, paid upfront at closing
• Moving costs — $500–$5,000 depending on distance and volume

Frequently Asked Questions

What credit score do I need to buy a house?

For a conventional mortgage, most lenders want a credit score of at least 620, though scores of 740+ get the best interest rates. FHA loans are available with scores as low as 580 (with 3.5% down) or even 500 (with 10% down). A higher credit score directly lowers your interest rate — the difference between a 680 and a 760 score can mean 0.5–1% lower rate, saving tens of thousands over the life of the loan.

How much should I save before buying a house?

At minimum: your down payment (3.5–20% of the purchase price), plus closing costs (2–5%), plus a move-in reserve of $2,000–$5,000. Beyond that, you should keep a 3–6 month emergency fund intact after the purchase — buying a house should not wipe out your entire savings. If it would, you may need more time to save before buying.

Is renting or buying better financially?

It depends heavily on how long you plan to stay. Buying typically becomes the better financial decision after 5–7 years in the same home, when you've built enough equity and offset the transaction costs. If you may move within 3–4 years, renting is often the smarter financial choice. The calculator above helps you understand whether the mortgage itself is affordable — but the rent vs. buy decision also depends on local price-to-rent ratios.

More Free Affordability Calculators

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