What the Bank Says vs. Reality
Mortgage lenders will approve you for far more than you should spend. A bank might say you qualify for a $500K mortgage. That doesn't mean buying a $500K house is smart. Lenders care about getting repaid. They don't care if you eat ramen for 30 years.
The 28/36 Rule
The traditional guideline: spend no more than 28% of gross income on housing costs (mortgage, taxes, insurance) and no more than 36% on total debt (housing + car + student loans + credit cards).
On a $100K household income, that's roughly $2,333/month for your total housing payment — including property taxes, homeowner's insurance, and PMI if applicable.
The Real Costs People Forget
PITI is just the start. Your mortgage payment includes Principal, Interest, Taxes, and Insurance. But homeownership also means: maintenance (budget 1-2% of home value annually), repairs, HOA fees, utilities that are higher than your apartment, furniture, landscaping, and the opportunity cost of your down payment.
Rent vs. Buy: The Honest Math
Buying isn't always better than renting. In high-cost cities, renting and investing the difference often wins. The key factors: how long you'll stay (less than 5 years usually favors renting), local rent-to-price ratios, and your opportunity cost of the down payment.
🏠 Try Our Mortgage Calculator →