How to Decide How Much House You Can Actually Afford

Deciding how much house you can afford is one of the most important financial decisions you’ll ever make. While lenders may approve you for a large amount, that number doesn’t always reflect what will feel comfortable month to month. Affordability isn’t just about qualifying for a mortgage — it’s about choosing a home that supports your lifestyle, savings, and long-term financial goals.

Start With Your Monthly Budget, Not the Purchase Price

Instead of focusing on the total price of a home, start with what you can realistically afford each month. Your housing costs should leave room for savings, emergencies, and everyday expenses. A common guideline is to keep total housing costs — including mortgage or rent — within a manageable portion of your income so you’re not financially stretched.

Factor in All Housing Costs

Many people focus only on the mortgage payment, but housing comes with additional expenses that add up quickly. These often include property taxes, insurance, utilities, maintenance, and service charges or HOA fees. When calculating affordability, include all these costs so there are no surprises after you move in.

Consider Your Lifestyle and Priorities

A home should support the life you want, not limit it. Ask yourself whether you value travel, dining out, saving aggressively, or flexibility in your career. Choosing a house at the top of your budget may restrict these choices. A slightly smaller or less expensive home can offer more freedom and less stress.