How much house can you actually afford?
Two different answers, and why the gap between them matters.
There are two numbers, and confusing them is how people end up house-poor. One is what a lender will approve. The other is what you can carry without your budget getting tight every month. On an $85,000 salary those numbers are roughly $398,000 and $310,000 — and only one of them is a recommendation.
The rule of thumb, and where it comes from
The most durable guideline is the 28/36 rule, which comes out of decades of mortgage underwriting practice:
- 28% — total housing cost stays at or below 28% of your gross monthly income. That means principal, interest, property tax, and insurance together, not just the loan payment.
- 36% — all your debt payments combined stay at or below 36% of gross monthly income. Housing plus the car loan, student loans, and credit card minimums.
The second number is the one people forget, and it is often the binding one. Two people with identical incomes can afford very different houses depending on what they already owe.
Worked example: $85,000 a year
Gross monthly income is $7,083. That sets two ceilings: $1,983 for housing (28%) and $2,550 for total debt (36%).
Say you also have a $400 car payment and a $150 student loan — $550 of other debt. The 36% rule leaves $2,000 for housing, and the 28% rule caps it at $1,983. The lower number wins, so the working budget is about $1,983 a month, all in.
Now work backward into a price. For this example: a 30-year fixed at 6.52%, 20% down, property tax at 1.0% of value per year, and $150 a month for insurance. Those last two vary enormously by state and property — they are assumptions here, not national truths.
| Component | Monthly |
|---|---|
| Principal & interest on a $248,571 loan | $1,574.41 |
| Property tax (1.0%/yr) | $258.93 |
| Home insurance | $150.00 |
| Total monthly payment | $1,983.33 |
That supports a home price of about $310,000, with $62,143 due at closing for the down payment alone — before closing costs.
What the lender would approve instead
Mortgage underwriting commonly stretches to a total debt-to-income ratio of 43%, and sometimes beyond it with strong credit or reserves. At 43% of $7,083, minus that same $550 of other debt, the housing allowance becomes $2,496 a month — supporting roughly $398,000.
The costs that never appear in a quote
Every number above is the mortgage payment. Owning the house costs more than paying for it.
Maintenance is the big omission. A widely used planning figure is 1% of the home's value per year. On a $310,000 house that is about $259 a month — a roof fund, a water heater fund, an HVAC fund. It shows up in no mortgage quote and no pre-approval letter, but it is as real as the tax bill. Add it and the true monthly outlay is roughly $2,242, or 31.7% of gross income.
Also frequently missed:
- HOA dues, which count against your 28% and can run anywhere from $25 to several hundred dollars a month.
- Utilities on a larger space, which are usually meaningfully higher than an apartment's.
- PMI, if you put down less than 20% — see below.
The down payment tradeoff
Putting down less gets you into a house sooner, and costs you in two ways. Using the same $1,983 monthly budget:
| Down payment | Home price | Cash at closing | PMI |
|---|---|---|---|
| 20% | ~$310,000 | $62,143 | $0 |
| 10% | ~$265,000 | $26,536 | ~$100/mo |
The smaller down payment cuts the cash you need by about $35,600 and costs you roughly $45,000 of house, because PMI eats part of the monthly budget that would otherwise service a larger loan. Neither answer is wrong — but PMI is not permanent. It typically drops once you reach 20% equity, which reframes it as a temporary toll rather than a penalty.
What moves the answer most
- The interest rate. It changes what a given monthly payment can buy more than almost anything else. This is worth modeling rather than guessing.
- Where you buy. Property tax rates and insurance premiums vary by multiples across states, not percentages.
- Your existing debt. Every $100 of monthly debt payment removes roughly $100 from your housing budget under the 36% test — and clearing a car loan before shopping can move your price range materially.
- Your own tolerance. The 28/36 rule is a convention, not physics. Plenty of people deliberately spend less to keep their options open.
Run it with your own numbers
Every figure above is an example built on stated assumptions. Yours will differ — particularly the tax rate, insurance, and interest rate.
It handles PMI, escrow, HOA, extra payments, and the full amortization schedule, and it seeds property tax and insurance benchmarks by state. Because the calculators share data, your take-home pay from the Income calculator and your existing obligations from the Debt calculator feed straight into the affordability picture — no retyping, and no sign-up.
CuraMoneta is an educational tool and does not provide financial, tax, or legal advice. Rate example reflects the 30-year fixed average as of June 13, 2026 (Freddie Mac); property tax and insurance figures are illustrative assumptions.