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How Much House Can I Afford??

Are you in the market for buying a house? Or maybe you’re looking to move and you’re wondering, “Now really, how much house can I afford?“. The answer isn’t always easy because it’s a little different for everyone. But with the tips below, you’ll be able to get a quick idea of:

  1. If you should even be buying a house in the first place
  2. How much house you can actually afford

How Much House Can I Afford??

Alright, I’m going to make this really easy because honestly, this isn’t nearly as complicated as everyone makes it out to be.

how much house can I affordYou Shouldn’t Buy a House If…

I know you’re asking “How much house can I afford?”, but sometimes people ask this when in reality they should be asking, “Should I even buy a house?” I find that more often than not, the answer to this question is, “No”.

Do NOT buy a house if…

  • You’re not out of consumer debt
  • You don’t have an emergency fund
  • You’ll probably move soon
  • Your life situation will change
  • You travel a ton
  • You’re just plain irresponsible

If you still have consumer debt (credit cards, car loans, student loans, etc.) and don’t have an emergency fund set up, your house will be a curse to you. Houses are expensive and they always come with surprises. If you’re broke to begin with and have very little savings, your house will suck you dry. DO NOT buy a house.

If you travel all the time, are irresponsible, or will likely move in less than five years, then don’t buy a house! Houses require upkeep and if you’re not around it will just be a drag on you. And if you plan on moving soon, why spend all your hard-earned money on broker’s fees, closing costs, and interest payments? It just doesn’t make any sense!

Stop asking, “How much house can I afford?” and instead, start asking yourself, “What’s the cheapest rent I can possibly get right now?”

How Much House Can I Afford? The Quick, Easy Answer

Where do people typically go if they want to know how much house they can afford?  To the bank of course!

But is this wise?


…but why not?

The bank wants to stretch you as much as they possibly can financially so that they can earn the most money, not you. If you ask the bank how much you can afford, you’ll be left strapped for cash for the next 30 years, and it will be nearly impossible for you to build a wealthy future for yourself.

Where’s the next place people go to figure out how much house they can afford? To mortgage calculators online (one may have even showed up on this page…)…. Well guess what, these all lead back to the banks! So stay away from them too!

What you want is a quick, easy answer that will enable you to buy a house that’s reasonable for your income.

And here is your answer…

Drum roll…!!!

“How much house can I afford?”one that’s twice your annual income.

That’s it!!how much house can I afford

What’s the Math Behind This Answer?

For all you math nerds out there and for those that might just be new to me (and don’t trust me blindly yet ;)), here’s the math behind the simple answer.

I recommend that people get a 15-year fixed loan with a payment that’s no more than 25% of their take-home pay. This way people won’t take debt into their retirement, and they’ll have enough cash while they’re paying the mortgage so they can actually enjoy their lives.

So, if you have a $50,000 a year income, your take-home pay is likely $35,000 a year (fricken Uncle Sam….), or $2,917 a month. To live comfortably (and you know…to do things other than sit in your house and stare at your expensive walls), I’d like to see you have a house payment that’s no more than 1/4 of that — or $729.

According to my quick answer above, you should be able to afford a house that’s two times the amount of your annual salary. In our case here, that’s $50,000 x 2, which equals $100,000.

And sure enough…

  • at a 3.5% interest rate,
  • over 15 years,
  • you’ll have a payment of $715 on a $100,000 mortgage.


So if you make $100,000 a year, your mortgage should be no more than $200,000…and so on and so forth.

Do the math with your household income and quickly answer the question, “How much house can I afford?”

Related: Free Mortgage Payoff Calculator – How Quickly Could You Pay Off YOUR Mortgage??

How Much House Can I Afford? Keep It Simple

Knowing what you should spend on a house is really simple – just keep it within double your salary. That’s it, people! It’s really not any more complicated than that!

Don’t go out there and start looking at houses that are way out of your price range or that have “creative financing”. You’ll just get yourself into trouble, and you’ll hate yourself in the long run.

Repeat after me:

  • 15-year fixed loan
  • Double my salary

That’s the answer and you absolutely won’t regret it!

“How much house can I afford?” What was your answer to this question?

Housing Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Good stuff as usual. Might I add this:
    You also need to look at: insurance, hoa/poa dues, pmi (if you dont have enough down) and maintenance/utilities. Your 750 will jump to about 1200 +/-.
    I also don’t like that loan agencies base it off of ones gross and not net. Its a severe pet peeve of mine. I know it gets one into a higher loan but if ones salary is not realized then how can one afford that higher premium….
    25% @ 15/20yr. Min 20% down. Pay your insurance 1yr in advance to get the discount (and keeping paying yourself ie savings acct for next year’s pmt). Set aside 5% of monthly pmt for maintenance; 900 mo x .05 = 45. May not seem like much and wont cover a whole lot other than dyi items typically, but if nothing goes wrong for the year, that’s 500+ bucks sitting there to roll over and carry thru to next year.

    • Yup, plenty of other things to consider. But, if one starts off with a 30 year loan on a house that’s 4x his/her income, they’ve already lost…

  2. I want to scream at those house hunter shows on TV where the buyer says the max budget is so much and the realtor takes them to see a house $50,000 over the max. The realtor then says, “I want you to keep an open mind, I think you’ll agree the house is worth it.” It might be worth it but if they don’t have the money, they can’t afford it. It isn’t like the bank gives them more than the max because the house has all the bells and whistles. The realtor is just trying to up their commission. Jeez. How unethical.

    • Ha, I’m with you Kathy! I can’t even watch shows like that anymore. Instead, I watch Netflix “Escape to the Countryside”. It’s really people, real houses, and the realtors actually work within the budget of their clients. It makes for much more relaxing television. 🙂

  3. I have never really understood how one can afford a decent house in New York or California. If you look up the annual average salaries they are no doubt a bit higher than the rest of the country (say $20,000/ annually) but the houses are in many case 10 times more expensive than in the South or Midwest. Going out on a limb and using the example of someone making $150,000 which is a darn good salary, your advice above would only amount to a mortgage of $300,000 which still gets you squat in these areas. And yet the average home price sale in San Francisco was something like $1.1 million I read just recently. Are these home buyers just trust fund kids or am I mission something?

    • Many are just borrowing above their means. When I say they should only buy a house that’s $300k, that means the bank will probably lend them $500k-$600k and make them house poor. For those buying homes in the $1.1M range, They’re likely earning north of $200k.

      If you make $150k and work in NYC, you’re probably buying a house an hour away and commuting each day. Not what I would choose to do, but to each his/her own!

  4. I love this advice, Derek! I was just searching for this information earlier this week, and found the most complicated calculators. After I completed one of them, it said it couldn’t calculate anything for me in my state…???
    Where I live in the midwest, there are a lot of affordable options; it simply depends on the level of crime you are willing to tolerate as to how affordable you want to be. That said, there are inexpensive gems in some areas where the reputation of crime is merely an outdated stigma, and the residents are working to improve the community.
    I personally am using 25% of my take home pay as the guide, because deductions vary, but net is net.

    • Nice!! Yeah, it’s pretty simple. If you want to borrow money for a house, don’t exceed the 2x rule. Donezo. 😉

      Using 25% of your take-home pay works too. Stick to that rule and you’ve got a good shot at becoming wealthy!

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