How Much House Can I Afford? Simple Steps to Find Your Budget

Thinking about buying a home but not sure if your paycheck can cover the price tag? You’re not alone. Most first‑time buyers worry about stretching their finances too far. The good news is you can get a clear answer in just a few minutes by looking at the right numbers.

Step 1 – Work Out Your Income and Debt Ratio

Start with your gross (pre‑tax) income. Add up everything you earn – salary, bonuses, side‑hustle cash. Next, list all monthly debt payments: credit‑card bills, car loans, student loans, any other regular outgoings. Lenders usually apply the 28/36 rule: no more than 28 % of your gross income should go to housing costs and no more than 36 % to total debt. For example, if you earn £3,500 a month, your maximum mortgage payment would be about £980 and your total debt load shouldn’t exceed £1,260.

Plug those numbers into a simple spreadsheet or an online mortgage calculator. The tool will show you the loan size that fits inside the limits you just set.

Step 2 – Add Deposit, Rates and Extra Costs

Knowing the loan amount is half the story. You’ll also need a deposit – most lenders ask for at least 5‑10 % of the purchase price. If you can save a 20 % deposit, you’ll get better rates and lower monthly payments.

Mortgage rates change all the time, so use a realistic rate (say 5 % for a typical 25‑year term) when you calculate. Multiply the loan amount by the rate to see how interest will affect your payment.

Don’t forget other expenses: stamp duty, legal fees, valuation costs, insurance, and ongoing maintenance. A safe rule is to set aside another 1‑2 % of the purchase price each year for upkeep.

When you add the deposit, the estimated monthly mortgage payment and the extra costs, you’ll have a full picture of what you can realistically afford.

Here’s a quick cheat sheet:

  • Gross monthly income × 0.28 = max monthly housing payment.
  • Gross monthly income × 0.36 = max total debt payment.
  • Target deposit = 5‑20 % of house price.
  • Use a 5‑year fixed rate of 5 % for rough calculations.
  • Budget an extra 1‑2 % yearly for maintenance.

If the numbers line up, you’ve found a price range that works for you. If they don’t, consider boosting your deposit, reducing debt, or looking at cheaper areas.

Next Steps – Get a Pre‑Approval and Stay Flexible

Once you have a ballpark figure, talk to a mortgage adviser or your bank. A pre‑approval shows sellers you’re serious and lets you lock in a rate before the market shifts. Keep your budget flexible – unexpected costs pop up, and interest rates can move.

Remember, the most important thing is not just the price tag but how comfortable you feel with the monthly outflow. A house that stretches you thin will make life stressful, while a modest home with room to save lets you enjoy the new space.

Ready to calculate? Grab a calculator, plug in your numbers, and you’ll have a solid answer to the question, “How much house can I afford?” in no time.

How Much House Can I Afford on $36,000 a Year? 2025 Guide with Real Numbers
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On a $36,000 salary, most buyers can afford roughly $95k-$135k homes in 2025, depending on debt, rate, taxes, and down payment. Clear steps, examples, and a table.