How Much House Can You Afford? Your Quick, Easy Guide
- Justin McCurdy
- Sep 1
- 10 min read
Updated: Sep 12
So, you're trying to figure out how much house you can actually afford. It’s a huge, exciting step, and I'm here to help make it clearer. The classic rule of thumb that lenders use is a good place to start: your total monthly housing costs shouldn't be more than 28% of your gross monthly income.
It’s a simple guideline, but it’s powerful. Sticking to it helps you create a realistic budget from day one so you aren't "house poor" later. Let's walk through this together in a friendly, practical way.
What 'Affordable' Actually Means for You
Before you fall in love with a gorgeous place in White Marsh or Edgewood, let's get real about what "affordable" truly means. It’s not just about the biggest loan a bank is willing to give you. It's about finding a monthly payment that lets you live your life without financial stress.
True affordability is that sweet spot where your dream home and your desired lifestyle can coexist happily.
Getting there means taking an honest look at three things: your income, your current debts, and the size of your down payment. Thinking through these elements early on helps you sidestep the common myths of buying a home.
A Quick Reality Check on Salary vs. Home Price
Let's put some numbers to this to give you a clearer picture. These are just ballpark figures, of course—your specific debts and down payment can shift them significantly. Still, they're a great starting point for house hunting in Baltimore County or Harford County.
Annual Salary | Estimated Home Price Range |
|---|---|
$75,000 | $225,000 - $300,000 |
$100,000 | $300,000 - $400,000 |
$150,000 | $450,000 - $600,000 |
A table like this helps anchor your expectations in reality, so you can spend your time looking at homes that are a genuine financial fit.
Here's what I always tell my clients: The goal isn't just to buy a house. It's to build a life you love inside that house. A comfortable budget is the foundation that lets you enjoy your new space without worry.
This is where I come in. While the builder I represent provides high-quality homes, I go a step further—offering my clients unique customization tools, hands-on service, and access to visualizers that help you bring your dream space to life. From picking out countertops to choosing the perfect flooring, I'm here to help you create a space that feels like it was made just for you.
Getting Your Financial Ducks in a Row
Before you can nail down that magic number of "how much house you can afford," you have to get a crystal-clear picture of your own finances. Think of it as laying out all the puzzle pieces before you start building. Lenders need to see your full financial story to feel confident giving you a loan, and honestly, you need to see it too.
It all starts with getting your paperwork together. Things like your recent pay stubs and W-2s are what show lenders you have a steady income. That consistency is a huge green flag for them, proving you can handle a monthly mortgage payment without breaking a sweat.
The Paper Trail: What You'll Need to Gather
Your bank statements are just as important. They show where your down payment is coming from and give a glimpse into your saving habits. You’ll also need to pull together statements for every single debt you have—car loans, student loans, credit card balances, you name it. This is what they'll use to figure out your debt-to-income (DTI) ratio, a critical number that heavily influences how much you can borrow.
Here’s a quick list to help you get organized:
Proof of Income: Your two most recent pay stubs and W-2s from the last two years.
Asset Information: Bank statements from the last 2-3 months for all your checking and savings accounts.
Debt Records: Current statements for car loans, student loans, and credit cards.
Identification: A copy of your driver’s license and Social Security card.
Tackling this now makes the whole pre-approval process feel less like a chore and more like the exciting first step it is. For more in-depth advice, take a look at our financial tips for buying a home.
Knowing these numbers inside and out is empowering. It’s not just about getting a loan—it's about setting a budget you can live with comfortably. That confidence lets you focus on the fun part, like dreaming up ways to personalize your future home in a great Maryland community, from Baltimore to Harford County.
It's also smart to keep an eye on the bigger picture. Housing experts often use a "median multiple" (dividing the median house price by the median income) to see how affordable a market really is. Right now, in many places, housing costs are the biggest strain on people's wallets, a challenge that families everywhere are facing.
How Lenders See Your Wallet
Ever wonder what goes on behind the scenes when a lender decides how much you can borrow? It's not magic, I promise. It really comes down to a few key numbers, primarily your Debt-to-Income (DTI) ratio. A classic rule of thumb they often start with is the 28/36 rule.
Think of it like this: lenders want to see that your new house payment won't be more than 28% of your gross monthly income. At the same time, all your monthly debts combined—that's your new mortgage plus things like car payments, student loans, and credit card bills—shouldn't exceed 36% of your income.
It’s a quick gut-check for them to see if you can handle the new loan without stretching yourself too thin.
Putting the 28/36 Rule to the Test
Let's make this real. Say your household's total gross income (that's before taxes) is $6,000 a month. Here’s how the numbers would shake out:
Your Housing Limit (28%): Lenders would want your total mortgage payment—including principal, interest, taxes, and insurance—to be at or below $1,680. ($6,000 x 0.28 = $1,680)
Your Total Debt Limit (36%): All your monthly debt payments combined shouldn't top $2,160. ($6,000 x 0.36 = $2,160)
Getting comfortable with these numbers puts you in the driver's seat. You can see your finances the way a lender does, which lets you make smart moves before you even start looking. Getting your financial ducks in a row is the first step, but timing the market is also a big piece of the puzzle. If you're wondering about that, you might want to check out our guide on when is the best time to buy a house.
To give you a clearer picture, here’s a quick breakdown of how the 28/36 rule works across different income levels.
The 28/36 Rule in Action: A Quick Guide
This table shows how the 28/36 rule applies to different monthly incomes, giving you a practical estimate for your housing and total debt limits.
Gross Monthly Income | Max Housing Payment (28%) | Max Total Debt Payment (36%) |
|---|---|---|
$5,000 | $1,400 | $1,800 |
$7,500 | $2,100 | $2,700 |
$10,000 | $2,800 | $3,600 |
$12,500 | $3,500 | $4,500 |
As you can see, knowing these guardrails helps you zero in on a realistic budget pretty quickly.
Of course, your down payment is another huge piece of the puzzle that directly impacts your monthly payment. The loan you get makes a big difference here.
From 0% down for a VA loan to the well-known 20% for a conventional loan, there's a lot of flexibility based on your specific situation.
Using these ratios to frame your budget helps you land on a home price that feels right. This isn’t just about getting a loan approved; it’s about finding a home you’ll love in a great community without the constant stress of a mortgage that's too big.
While the builder I work with is known for high-quality homes, I always try to add more value. I give my clients hands-on service and access to unique visualizer tools. These let you play around with different flooring, cabinets, and countertops on-screen, so you can see your vision come to life and truly let you customize your new home.
Budgeting for More Than Just the Mortgage
That monthly mortgage payment gets all the glory, but it’s far from the only bill you’ll be paying as a homeowner. The real, all-in cost of owning a house includes a handful of other expenses that can really sneak up on you if you aren't prepared.
Getting a handle on these before you start house hunting is the secret to figuring out what you can truly afford without stretching yourself too thin down the road.
The Big Four Beyond Your Mortgage
When you hear lenders talk about your payment, they often use the term "PITI." That stands for Principal, Interest, Taxes, and Insurance. The first two are your actual mortgage, but let's break down the other costs that are just as important.
Property Taxes: This one is a biggie, and it changes dramatically depending on where you live. For a home in Baltimore County or Harford County, it's not unusual for property taxes to add $200-$500 or more to your monthly housing bill.
Homeowners Insurance: Your lender will require you to have this. It protects their investment (and yours!) from disasters like fires or major storms.
HOA Fees: Thinking about a condo or a home in a planned community? You'll likely have Homeowners Association fees to cover things like landscaping, pools, or trash removal.
Routine Maintenance: Things break. Experts say you should plan on setting aside 1-2% of your home's value every year for upkeep. For example, on a $350,000 home, that’s $3,500 to $7,000 a year, or about $290 to $580 per month saved for those inevitable repairs.
Here's a pro tip I always give my clients: open a separate savings account just for home repairs. When your furnace decides to die during a Maryland cold snap, you’ll be incredibly thankful that cash is sitting there, ready to go.
Thinking this far ahead is more critical than ever. We're in a market that's been squeezed by a serious housing shortage. To put it in perspective, major developed economies are short about 6.5 million housing units, which is a huge factor driving up prices. You can discover more insights about this global housing trend on Hines.com.
When you account for all these costs, you get a much more realistic picture of your financial commitment. It’s what ensures the home you fall in love with—whether it's in a great community like White Marsh or Edgewood—remains a blessing, not a financial burden.
Making Your New House Feel Like Home
Alright, you've crunched the numbers and locked in your budget. Now for the fun part—actually imagining yourself in a new home. This is what I love most about my job: helping people find that sweet spot where a well-built house becomes a home that truly reflects who they are.
In our Maryland communities across White Marsh, Edgewood, and throughout Baltimore, Harford, and Prince George's County, you’re not just buying a property. You're getting the chance to create your home by selecting the finishes that fit your style. I give my clients access to some really cool visualizer tools that let you play around with different flooring, countertops, cabinets, and tile right on the screen.
Bring Your Vision to Life
Think of it as a virtual design studio. You can mix and match styles and see exactly how your choices look before a single nail is hammered. This completely takes the guesswork out of the process, ensuring the space you walk into on move-in day already feels like it’s yours. It’s about so much more than the mortgage—it’s about creating a backdrop for your life.
This is a huge advantage, especially in today's market. The housing situation for 2025 is a bit unusual. We're seeing the highest inventory of brand-new homes since 2008, but the supply of existing homes for sale is still lagging way behind historical norms. If you're curious about the specifics, JPMorgan's 2025 housing market outlook breaks it down really well.
What does this all mean for you? It means choosing a new home where you can pick your own finishes is one of the smartest moves you can make. You get a space built to today's standards that you can shape to your exact tastes, all without the headache and cost of a big renovation project.
Ready to start designing? Let's connect and explore the possibilities. We can fire up the visualization tools and start building your dream space today.
Common Questions About Home Affordability
Navigating the path to homeownership always brings up a lot of questions. Over the years, I’ve heard just about all of them! Let’s tackle some of the most common ones I hear from clients looking for homes in communities like White Marsh, Edgewood, and throughout Baltimore County.
How Much of a Down Payment Do I Really Need?
The old “you must have 20% down” rule is one of the biggest myths in real estate. While hitting that 20% mark is great because it helps you avoid Private Mortgage Insurance (PMI) and lowers your monthly payment, it's far from a requirement these days.
In fact, many buyers I work with use loan programs that allow for much smaller down payments.
FHA Loans: These often require as little as 3.5% down.
Conventional Loans: It's very possible to secure these with just 3-5% down.
We can run the numbers together to see which option makes the most sense for your specific situation.
Should I Pay Off All My Debt Before Buying?
Not necessarily. It sounds a little backward, I know, but sometimes it’s smarter to hold onto your cash for a down payment and closing costs rather than wiping out a low-interest loan, like a student or car loan.
Lenders care most about your overall Debt-to-Income (DTI) ratio. The key is finding the right balance to make your application as strong as possible without draining your savings.
Will Getting Pre-Approved Hurt My Credit Score?
Getting pre-approved does involve a "hard inquiry" on your credit report, which can cause a small, temporary dip in your score—usually less than five points.
But here’s the good news: credit bureaus understand that people shop around for rates. Multiple mortgage inquiries within a short window (typically 14-45 days) are usually bundled together and treated as a single event.
The benefit of knowing exactly how much house you can afford far outweighs the minor, temporary impact on your credit. It gives you the confidence to shop for a home you know is a financial fit.
Answering these questions is a great first step. If you have more, check out our extensive list of frequently asked questions to get even more clarity.
While the builder I represent provides high-quality homes, I go a step further—offering my clients unique customization tools, hands-on service, and access to visualizers that help you bring your dream space to life. You get to pick your flooring, countertops, cabinets, tile, and more to create a home that's uniquely yours. Let's find your perfect home in one of our beautiful Maryland communities. Visit us at https://www.customizeyourhome.com.
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