How Much House Can You Actually Afford? A Realistic Guide

The Problem with Bank Pre-Approvals Banks will often pre-approve you for a mortgage amount that is far more than you should comfortably spend. Just because a lender says you can borrow $500,000 does not mean you should. Lenders evaluate your ability to make payments, but they do not account for your other financial goals, lifestyle preferences, or the full costs of homeownership. The 28/36 Rule A widely used guideline for determining housing affordability is the 28/36 rule: 28% Rule: Your total monthly housing costs (mortgage, property taxes, insurance, HOA fees) should not exceed 28% of your…