How Much Home Can You Afford: A No-Nonsense Guide for Homebuyers

You’ve binge-watched enough HGTV to know you want a house. Now the big question: how much house can you actually afford? Because despite what social media makes it seem, buying a home isn’t as simple as “manifesting” it into existence.

Let’s break it down and figure out what’s realistic—without sugarcoating it.

Step 1: Get Real About Your Finances

Before you go picking out your dream home with the Pinterest kitchen, you need to know what you’re working with. This means taking a hard look at your income, expenses, and existing debts—you know, all the fun stuff.

How Much Money Do You Actually Make?

We’re talking gross income here (before taxes and deductions steal their share). This includes:
✅ Your salary (yes, the actual number, not what you feel you deserve)
✅ Bonuses or commissions
✅ Side hustle or freelance income
✅ Rental or investment income (if you’re already that fancy)

This is the number lenders will use when deciding how much they think you can afford. (Spoiler: Their idea of “affordable” and your actual comfort level might not be the same.)

Now, Where’s Your Money Going?

Time for the reality check. List out your monthly expenses, including:
💡 Rent or current housing costs
💡 Car payments, gas, insurance (aka the privilege of getting places)
💡 Credit cards, student loans, or any other debts hanging over your head
💡 Groceries, subscriptions, and the occasional overpriced coffee
💡 Health, life, and any other necessary insurance
💡 Random expenses—because pretending you’ll never eat out again isn’t fooling anyone

If you’re already spending most of your income just existing, it might be time to scale back a little before jumping into homeownership.

Step 2: The 28/36 Rule (A Guideline, Not the Gospel)

Lenders use the 28/36 rule to figure out how much debt you can handle without drowning.

📌 28% Rule: No more than 28% of your gross monthly income should go toward your mortgage payment, property taxes, homeowners insurance, and (if applicable) private mortgage insurance (PMI).

📌 36% Rule: Your total debt—including your new mortgage, car loans, student loans, and credit cards—shouldn’t exceed 36% of your gross income.

👉 Translation: Just because you can qualify for a higher loan amount doesn’t mean you should take it. Being “house poor” is a real thing, and it’s not nearly as glamorous as Instagram makes it look.

Step 3: The “Surprise! Here Are More Costs” Section

Owning a home comes with hidden costs that first-time buyers tend to underestimate (or completely forget about). Let’s fix that.

💰 Down Payment:

• Not always 20%! Some loans allow as little as 3% down (FHA is 3.5%, VA and USDA can be zero).

• A bigger down payment = lower monthly payment, but draining your entire savings is not a great idea.

💰 Closing Costs:

• Usually 2%–5% of the home price (because, of course, there are extra fees).

• Covers things like loan origination, inspections, title searches—basically, the fine print that makes your purchase legit.

💰 Home Maintenance & Repairs:

• Budget at least 1% of your home’s value per year for things breaking at the worst possible moment.

• Yes, even new homes will eventually betray you.

💰 Utilities & HOA Fees:

• If you’re upgrading from an apartment, expect higher utility bills.

• HOAs can be great—or a nightmare—so read the fine print before signing up for a neighborhood with rules about what color your trash can has to be.

Step 4: Get Pre-Approved (AKA Know What You Can Actually Spend)

This is where things get real. A pre-approval is a lender saying, “We’ve checked your finances, and this is what we’re actually willing to give you.”

What You’ll Need for Pre-Approval:
✅ Proof of income (pay stubs, tax returns, etc.)
✅ Bank statements (because lenders want to know if you’re secretly broke)
✅ Credit check (yes, they’re judging your past financial decisions)
✅ Debt info (because that car loan and student debt aren’t invisible)

A pre-approval gives you a legit budget to work with and makes you look serious to sellers. Without it, house hunting is just window shopping.

Step 5: Don’t Fall for “Dream House” FOMO

Now that you’ve got your budget, let’s talk about sticking to it. It’s easy to get emotionally attached to a home that’s just over your price range. Before you stretch your budget, ask yourself:

• Will I still love this house if the AC dies in July and I can’t afford to fix it?

• Am I okay with saying goodbye to eating out, vacations, and fun in general?

• Do I want to spend the next 30 years feeling financially stressed?

If the answer is no, stay within your budget. Trust me, there will always be another “perfect” house.

Step 6: Find the Right Realtor (or Go Solo, If You Dare)

A good real estate agent will:
✔️ Help you navigate the market without getting scammed
✔️ Negotiate so you don’t overpay
✔️ Handle the paperwork so you don’t end up signing something crazy

If you go the DIY route, make sure you actually know what you’re doing. Otherwise, having an agent is probably worth it.

So, What Now?

By now, you should have a solid idea of how much home you can afford without ruining your financial future.

Next step? Get pre-approved so you can start shopping for a home you can actually afford. If you’re ready to take that step, click here to get started.

And if you’ve got questions, hit me up. I’d rather answer them now than hear about your financial regrets later.