How much house can I afford? The honest math
An affordable home price is not the largest loan a lender might approve. It is a payment that leaves room for taxes, insurance, maintenance, savings and normal life.
Start with the idea
Start with the monthly amount the household can sustain, then separate principal and interest from the other costs of ownership. The loan amount, annual interest rate and term determine scheduled principal and interest.
A complete housing budget can include property tax, homeowner insurance, mortgage insurance, association fees, utilities, maintenance and closing costs.
Worked example
Suppose a household is comfortable with a total housing budget of $2,300 per month. Estimated tax, insurance and association charges total $500. That leaves $1,800 for principal and interest.
At about 6% for 30 years, a $300,000 loan has principal and interest near $1,799 per month. A down payment would then be added to estimate the home price, while closing costs still require separate cash.
Quick reference
| Item | Meaning |
|---|---|
| Principal and interest | Loan repayment |
| Property tax | Location-dependent |
| Home insurance | Coverage-dependent |
| Maintenance | Irregular but real |
| Closing costs | Usually paid around purchase |
Common mistakes
- Using only the lender’s maximum approval
- Ignoring tax, insurance and maintenance
- Spending the entire cash balance on the down payment
- Testing only one interest rate
Practical steps
- Choose a sustainable total monthly housing budget.
- Estimate non-mortgage housing costs.
- Use the remainder for principal and interest.
- Test higher rates and unexpected expenses.
- Compare formal Loan Estimates from lenders.
Run your own numbers
Use the related Fynzo tool to test different inputs and compare results.
Open the Mortgage Calculator →Sources and review note
This article was reviewed for language, calculation examples and source links by Yasser Chahir, Fynzo editor. Last reviewed: July 31, 2026. It is general educational information, not medical, financial, tax or legal advice.