Buying a home is likely the biggest financial decision you will ever make, so the first question is also the most important: how much house can you actually afford? The answer is not just the largest loan a bank will offer — it is the payment you can comfortably live with. This guide walks through the rules lenders use, the costs beyond the mortgage, and how to find a realistic budget with a free calculator before you fall in love with a listing.
Key takeaways
- Affordability depends on income, debts, deposit and interest rate — not just the loan amount.
- The 28/36 rule is a widely used guide to sensible housing and total debt limits.
- A bigger deposit lowers your monthly payment and can unlock better rates.
- Always budget for costs beyond the mortgage, like taxes, insurance and upkeep.
The 28/36 rule explained
Lenders and financial planners often use the 28/36 rule as a starting point. It says that no more than 28% of your gross monthly income should go to housing costs, and no more than 36% should go to total debt, including the mortgage, car loans, student loans and credit cards. If you earn 5,000 a month before tax, that suggests keeping housing under about 1,400 and total debt under 1,800. It is a guide rather than a law, but staying near it keeps your budget healthy.
What actually drives your budget
Four factors shape how much you can borrow and repay comfortably:
- Income — higher, stable income supports a larger payment.
- Existing debts — the more you already owe, the less room for a mortgage.
- Deposit — a bigger down payment means a smaller loan and lower payments.
- Interest rate — even a small rate change moves your monthly payment noticeably.
The free Mortgage Calculator lets you plug in these numbers and see the monthly payment instantly, so you can test different price ranges before you view a single property.
Do not forget the hidden costs
The mortgage payment is only part of the true cost of owning a home. Budget for:
- Property taxes, which can add a meaningful amount each month.
- Home insurance, often required by the lender.
- Maintenance and repairs — a common guide is 1% of the home's value per year.
- Service charges or HOA fees for flats and managed developments.
- Utilities, which are usually higher in a larger home.
Leaving these out is the most common reason new owners feel stretched.
Why a bigger deposit helps
Saving a larger deposit does more than reduce the loan. It shrinks every future monthly payment, cuts the total interest you pay over the life of the mortgage, and often qualifies you for a lower interest rate because the lender takes on less risk. In many markets, crossing a deposit threshold also removes the need for extra mortgage insurance, saving even more.
Putting it together
A sensible process looks like this: estimate your stable monthly income, subtract existing debt payments, apply the 28/36 rule to find a comfortable housing figure, then work backwards to a home price using the calculator and your expected deposit and rate. Finally, stress-test it: could you still afford the payment if rates rose or your income dipped? If yes, you have a budget you can trust.
Conclusion
How much house you can afford comes down to a comfortable monthly payment, not the maximum a lender will approve. Use the 28/36 rule as a guide, account for the costs beyond the mortgage, and let a bigger deposit work in your favour. Run your own numbers now with the free Mortgage Calculator and set a realistic budget before you start house-hunting.
Stress-testing your budget
The smartest thing you can do before committing to a mortgage is to stress-test the payment. Ask yourself whether you could still comfortably afford it if interest rates rose by a couple of percentage points, if your income dropped for a few months, or if a large unexpected bill landed. A payment that only works when everything goes perfectly is a fragile one. Building in a margin — borrowing a little less than the maximum, keeping an emergency fund, and choosing a payment you could sustain through a rough patch — is what turns home ownership from a source of stress into a stable foundation. Run a few higher-rate scenarios in the calculator to see how much headroom you really have.
Frequently asked questions
What is the 28/36 rule?
It suggests spending no more than 28% of your gross monthly income on housing and no more than 36% on total debt payments. It is a widely used guide for keeping a home purchase affordable.
How much deposit should I aim for?
A larger deposit lowers your monthly payment, reduces total interest and can unlock better rates. Many buyers aim for 20% to avoid extra mortgage insurance, but the right figure depends on your market and finances.
Does the calculator include taxes and insurance?
The Mortgage Calculator can estimate payments including taxes, insurance and other costs, giving a more realistic monthly figure than principal and interest alone.
Should I borrow the maximum a lender offers?
Not necessarily. The maximum approval is often more than is comfortable. Aim for a payment you could still manage if rates rose or your income fell.