How to Know If You Can Afford a Mortgage: Simple Check 2026

To know if you can afford a mortgage, make three numbers agree: the amount a lender will approve, the amount your debt-to-income ratio allows, and the amount your real monthly budget survives without stress. The 28/36 rule is the usual starting point. It takes about an hour with a pay stub and a list of your bills.

Most people get the wrong answer because they compare a sale price to their paycheck. A price is not a payment. The monthly number has to cover principal, interest, property taxes, homeowners insurance, HOA dues where they apply, utilities, and the repairs nobody puts in the listing photo.

Here is the honest version: lenders approve what the math permits, not what your life can comfortably carry. Plenty of buyers get approved for a figure that leaves them house-rich but cash-poor, and they find out in the first HVAC breakdown. Nothing below is financial advice for your specific situation. Lender guidelines, loan programs and rates vary by state and change over time, so treat these as a method rather than a verdict, and confirm the current numbers with a lender or a HUD-approved housing counselor.

What You Need to Know If You Can Afford a Mortgage

Before you calculate anything, gather these figures. Most of them live in your bank portal and your last two years of tax returns.

• Recent pay stubs for 30 days, plus a rough 12-month income history. Lenders want consistency, not just a good month.
• Every monthly debt payment: credit cards, student loans, auto loans, personal loans, and the minimum payment on any line of credit.
• Your current housing costs: rent or mortgage, utilities, renters insurance, parking, storage.
• Down payment funds you can genuinely put down without emptying your emergency savings.
• A closing cost estimate of roughly 2 to 5 percent of the purchase price, depending on market and loan type.
• Property tax and insurance figures for the specific address, not for the neighborhood in general.
• HOA dues if the listing has them, plus what those dues cover.
• A rate and term assumption. A 30-year fixed loan is the easiest number to plan around, so start there.

One warning about the mortgage calculators online. Enter identical numbers into three of them and you may get three different answers, sometimes a spread that looks like a mistake. It usually is not one. The differences come from assumed down payment, assumed rate, whether taxes and insurance are included, and whether the tool is running a front-end test or a back-end underwriting test. Once you know which of those a tool is doing, the spread collapses.

Step-by-Step: A Six-Step Mortgage Affordability Check

1. Calculate Your Dependable Monthly Income

Divide your gross annual income by 12. That is gross monthly income, and it is the denominator in every ratio that follows. On a 70,000 salary that is 5,833 a month.

Then adjust down for income a lender will not fully count. Bonuses and commissions usually get averaged across one or two years, not taken at the best month. Self-employment income is typically averaged over 12 to 24 months after taxes, and 1099 work is harder to document than a W-2. Side income that never appeared on a tax return is usually invisible to an underwriter, and underwriting rules are stricter for close-to-retirement borrowers who will see a pay cut.

Rule of thumb: build your budget on the dependable floor, not the good year. If your five-year average is lower than your best two years, plan on the average.

2. Add Up Your Current Monthly Obligations

List every recurring debt payment. Credit cards at their minimum, not their balance. Student loans in repayment. Auto loans. Personal loans. Anything the lender will pull from your credit report as an installment or revolving balance counts.

Then list current non-debt housing outflows, because those do not disappear on closing day. Utilities, renters insurance, a gym membership, a storage unit, a commute cost. Use a real number from a three-month average of your spending, not a guess.

3. Estimate Your Complete Mortgage Payment

A payment estimate that shows only principal and interest is not a budget, it is an advertisement. Build the full number, usually abbreviated PITI, then add what PITI leaves out.

• Principal and interest: the loan itself, amortized over the term.
• Property taxes: billed annually, so divide by 12.
• Homeowners insurance: based on the specific address and your claims history.
• HOA or condo fees where the building has them.
• Mortgage insurance (PMI) when the down payment is under 20 percent, commonly calculated at roughly 0.5 to 1 percent of the loan amount per year, though it varies by program and credit profile.
• Utilities, maintenance and repairs: the line renters never think about.

Here is the arithmetic on a 300,000 house. With 20 percent down, that is 60,000 down and a 240,000 loan. At a 6.5 percent rate over 30 years, principal and interest run roughly 1,896 a month. Add 210 a month for property tax and 95 for insurance, and the PITI payment is about 2,200. Now add 130 for utilities, 80 for HOA dues, and a 150 monthly maintenance set-aside, and the real cost of ownership is closer to 2,560.

That 2,560 is the number to compare against your income and your savings. The 2,200 version is the one a listing advertises, and it is the one that makes people cry in month eight.

Component	Monthly estimate
Principal and interest	1,896
Property tax	210
Homeowners insurance	95
HOA dues	80
Utilities	130
Maintenance and repairs set-aside	150
True monthly cost	2,561

Illustrative figures for a 300,000 purchase with 20 percent down. Your taxes, insurance and dues come from the property itself, and they change over time.

4. How to Know If You Can Afford a Mortgage Using the 28-Percent Guideline

The 28/36 rule is a screening tool, not an approval decision. Front-end is housing costs at 28 percent of gross monthly income; back-end is all debt including the mortgage at 36 percent.

Ratio	What it counts	Benchmark
Front-end (housing)	PITI plus HOA, and often utilities and maintenance	28 percent of gross monthly income
Back-end (total debt)	Everything in the front-end plus every other monthly debt payment	36 percent of gross monthly income

On that 5,833 gross monthly income, 28 percent is 1,633 of housing and 36 percent is 2,100 of total debt. Subtract your existing 860 of car, student loan and card payments and you have 1,240 left for housing. The front-end test says 1,633. The back-end test is stricter, and the back-end test is the one lenders actually work from.

Here is where the rule gets misquoted. 28 percent is a planning benchmark drawn from decades of household spending data, not a law of finance. Plenty of buyers carry a higher front-end ratio and never miss a payment, particularly with no other debts and a strong savings habit. Plenty of buyers sit comfortably under 28 percent and still get crushed, because they had no maintenance reserve or a thin emergency fund.

Three factors move the result more than the percentage does: your down payment, your rate, and your credit profile. A larger down payment removes PMI and shrinks the loan. A better rate shrinks the payment on the same loan. A lower score raises the rate and may raise the loan-to-value requirements. So the same salary buys very different houses depending on which side of those lines you land on.

Standard	All housing costs as share of gross income	Who uses it
Lender ceiling	Often near 43 percent total debt	Underwriting, varies by program
28/36 guideline	28 percent front-end, 36 percent back-end	Long-standing planning rule
Conservative target	22 to 25 percent front-end	Buyers who want breathing room

Plan against the bottom row. The top row is a ceiling, and ceilings are for limits, not budgets.

5. Check Your Debt-to-Income Ratio and Credit Capacity

Debt-to-income ratio is total monthly debt payments divided by gross monthly income. Take the 860 of existing debts, add a proposed 1,150 housing payment, and you get 2,010. Divide by 5,833 and your DTI is 34.5 percent, which sits under both the 36 percent guideline and the common 43 percent ceiling.

The distinction matters. The front-end ratio asks whether housing alone is manageable. The back-end DTI asks whether everything together leaves room, and it is the number that decides what you are offered. Conflating the two is why people with a low housing ratio still get declined.

If your DTI is too high, pay down in this order. First, the highest interest rate you carry, which is usually a credit card, since those rates run far above anything else you owe. Second, retire any installment loan with a small remaining balance. Third, do not close old cards, because the available credit on them helps your utilization. Ask a lender to pull your credit report and review it line by line; errors that nobody disputes are common and removing them can move your score before you ever submit an application.

6. Test the Payment Against Cash Reserves and Future Costs

At closing you will need the down payment, closing costs, and earnest money that goes toward the purchase price. Closing costs typically run 2 to 5 percent of the price and can exceed the first payment several times over in a buyers market with a negotiated rate. Ask for the cash-to-close figure early, because it is the number that derails offers more often than the payment does.

After closing, keep two separate cushions. An emergency fund of three to six months of your new total housing cost, in cash or an account you can reach the same day. A maintenance reserve, because a roof or a water heater does not care what your budget says. Homeowners routinely budget roughly 1 to 3 percent of a home’s value per year for upkeep, and first owners eat that cost in full during the first eighteen months.

Then stress-test the payment. Assume your income drops 20 percent for six months. Assume the assessment on that property gets reassessed upward, because many homes that were bought below assessed value are not staying there. Assume utilities climb, which they have done every year for a decade. A payment you cannot absorb under any of those three conditions is not a payment you can afford, it is a bet.

Long-time buyers on the forums tend to budget forward five to ten years rather than at closing, folding in raises, property tax reassessment and utility growth. That habit is worth copying. A house-rich but cash-poor outcome usually starts as a fully funded account that gets spent, not as a payment that was too high on day one.

Common Mistakes That Make Buyers Overcommit

Using gross income when you have variable earnings. A bonus, commission or contract income averaged over two years is the honest number. Using one strong quarter to justify a thirty-year obligation is not.

Looking only at principal and interest. The gap between a PITI-only figure and your true ownership cost is where the surprise lives.

Believing every lender uses the same ratio. Programs and automated underwriting tolerances differ, and two lenders can approve the same borrower for very different amounts.

Spending the entire approved ceiling. An approval is a limit, not a target. Buy the house that leaves you room to absorb a repair, a raise that stalls, or a year of wanting less.

Emptying savings for the down payment. A larger down payment does not repay itself if it wipes out your ability to cover an emergency. A 10 percent down loan with PMI sometimes preserves more cash and flexibility than a 20 percent down loan that drains the account.

Ignoring tax reassessment and utility growth. A payment that fits today at a frozen assessment can be materially different in five years.

Skipping the independent check. Run your own numbers before you fall in love with a listing, not after you are already pre-approved and emotionally committed.

Applying without understanding what pre-approval means. A pre-qualification is a quick estimate. A pre-approval is a credit-reviewed commitment, and it is commonly valid for 60 to 90 days, so it goes stale fast in a competitive market.

Two competing rules float around and both have useful ideas in them. One is the 3-7-3 emergency framework: three months of expenses in liquid savings, seven months of debt payments set aside for emergencies, and three months of retirement contributions invested. The other is a 25 percent guideline that caps the mortgage payment at a quarter of take-home pay while assigning fixed slices to taxes, savings and giving. Neither is a lender rule, and the stricter one is deliberately unkind to high-tax states. Use them as stress tests against the 28/36 figures rather than as replacements for your own budget.

Gross annual income	28 percent front-end ceiling	After 700 of typical debts	Realistic PITI range
50,000	1,167	467	450 to 700
70,000	1,633	933	900 to 1,300
100,000	2,333	1,633	1,500 to 2,100
150,000	3,500	2,800	2,500 to 3,300

Illustrative only. Assumes no HOA, roughly 700 a month of other debts, and a 20 percent down payment. A first-time buyer earning 50,000 can buy, but the payment will eat a very large share of that income, and a 300,000 home at that salary is a stretch before taxes, insurance and maintenance are counted.

Frequently Asked Questions

Conclusion: Start With Your Comfortable Monthly Payment

To know if you can afford a mortgage, compare a conservative estimate of every housing cost against your dependable income, your existing debts and the cash you can keep in reserve. When all three agree, you are ready to shop. When the lender’s number is higher than yours, the lender’s number is a limit.

The first practical step takes an evening: write your true monthly cost on one page, all the way through utilities, taxes, insurance, HOA and maintenance. Then set your comfortable payment below it and take that number to a lender, or to a HUD-approved housing counselor if you would rather have guidance that is not attached to a loan application.