How much house can you afford?

The 28/36 rule, debt-to-income ratio, down payment, and the monthly costs buyers often forget — worked through with real numbers.

A lender’s approval tells you the most you can borrow, not the most you should. A comfortable home budget starts with your monthly income and the debts you already pay, then works backwards to a price. Start with the 28/36 rule Many lenders in the United States use the 28/36 guideline as a starting point: Work out your debt-to-income ratio Debt-to-income ratio (DTI) = total monthly debt payments ÷ gross monthly income × 100. If you earn $6,000 a month before tax and pay $400 for a car and $200 for student loans, your DTI before buying a home is 10%. Under a 36% limit, that leaves 26% — about $1,560 a month — for housing. Some loan programs accept higher ratios, but a higher ratio leaves less room for savings and surprises. The down payment changes everything A bigger down payment lowers the loan amount, the monthly payment, and the total interest you pay. On many conventional loans, putting down less than 20% adds private mortgage insurance (PMI) until you build enough equity. Keep an emergency fund separate from the down payment. Emptying your savings to buy leaves nothing for the first repair. Costs beyond the mortgage payment Interest rates move the answer On a 30-year loan, a r…