How Much House Can I Afford?

A common guideline is that your total monthly housing payment, including principal, interest, taxes, and insurance, should not exceed 28 percent of your gross monthly income. Your total monthly debt payments, including the mortgage, should stay below 36 to 43 percent of gross income depending on the loan program. For example, if you earn $8,000 per month, your housing payment should ideally stay under $2,240. However, these are guidelines, not hard rules. Factors like your savings, other financial goals, and local cost of living all play a role in determining a comfortable price range for your situation.