Principal and interest
The loan itself. This is the only piece most online calculators show, and it's often barely two-thirds of the real payment.
Affordability
How much house can I afford?
There are two answers to this question: what a lender will approve, and what you can live with. They are rarely the same number. Start with the calculator, then read why the gap exists.
7 min read · Updated 2026
How lenders decide
Underwriters look at debt-to-income ratio: your total monthly debt payments divided by your gross monthly income. Most loan programs want the total — mortgage payment plus car loans, student loans, credit card minimums and child support — under roughly 43% to 50% depending on the loan type and your compensating factors.
Notice what that math ignores: childcare, groceries, healthcare, retirement savings, and the repairs a house generates. That's why the approval number is a ceiling, not a target.
What's actually in the monthly payment
Property taxes
Set by your town and collected monthly into escrow. Two identical houses in neighboring towns can differ by hundreds per month.
Homeowners insurance
Required by every lender. Flood or coastal coverage adds meaningfully in some areas.
Mortgage insurance
Charged on most loans with less than 20% down. On conventional loans it can be removed later as equity builds.
HOA or condo fees
Fixed, non-negotiable, and counted by underwriters exactly like debt.
A saner way to set your number
- 1
Start from the payment, not the price
Decide the monthly number you'd still be comfortable with after a bad month, then work backwards to a price.
- 2
Hold back a repair reserve
Budget roughly 1% of the home's value per year for maintenance. It won't be spread evenly — it arrives as a water heater.
- 3
Keep saving after closing
If the payment eliminates your ability to save, the house owns you.
- 4
Get a written estimate
Ask a loan officer for a full payment breakdown on a specific property, including that town's actual tax rate.
Try it
Run your own numbers
Affordability estimate
An estimate, not a pre-approval. It includes taxes, insurance and mortgage insurance so the number reflects a real monthly payment.
Estimated home price you could support
$361,000
About $2,803/mo all-in — $2,124 principal & interest, $391 taxes, $120 insurance, $168 mortgage insurance.
FAQ
Common questions
Is the 28/36 rule still useful?
As a sanity check, yes: housing under 28% of gross income and total debt under 36%. Modern programs allow more, but buyers who stay near these numbers report far less stress.
Does a bigger down payment mean I can afford more house?
It lowers the payment and can remove mortgage insurance, but draining your reserves to reach 20% is usually the wrong trade.
Why is my approval higher than what I feel comfortable with?
Because underwriting only counts reported debt, not your actual life. The gap is yours to manage.
Do student loans stop me from buying?
No. They factor into your debt-to-income ratio, and how the payment is counted depends on your repayment plan and the loan program.
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