The bank will happily approve you for a payment that cancels your retirement.
"You're approved for $520,000!" is not an affordability answer — it's a liquidity statement. The bank computes what you can repay on paper, not what you can repay while also saving, traveling, and sleeping at night. Here's how to find your real number.
The 28/36 rule, activated
Lenders price risk with two ratios: housing costs ≤ 28% of gross monthly income, and total debt payments ≤ 36%. Work backwards from the second one — it's the binding constraint for most buyers. If your gross is $7,500/month and a car + student loans already take $700 (9.3%), your housing room isn't 28%; it's about 26.7% — and your comfortable number is lower still.
What "housing cost" really includes
The mortgage principal & interest is the visible part. The full monthly stack:
| Component | Typical range |
|---|
| Principal & interest | $1,900 on $320k @ 6.5%/30yr |
| Property tax | 0.5%–2.5% of value/yr (know your county) |
| Homeowners insurance | $120–250/mo (climbing in many states) |
| PMI if under 20% down | ~0.5–1% of loan/yr |
| HOA, if any | $50–400/mo |
| Maintenance set-aside | 1–2% of value/yr — the one everyone skips |
On paper the house costs $1,900; in reality it costs $2,700. Verify any candidate home's P&I in our mortgage calculator, then layer the rest.
The three numbers to run before touring
- The 28/36 ceiling — your eligibility boundary.
- The life-adjusted number — housing that still allows 15% retirement saving and your non-negotiables. Often 8–15% below the bank's offer.
- The stress test — if a rate reset, one income pause, or a $6,000 roof repair in year two breaks the budget, you're shopping too high. A three-to-six-month emergency fund, kept separate from the down payment, is part of the down payment.
Buy below the bank's affection and the house becomes what it should be: the place you build wealth from — not the reason you can't.
Educational content, not individualized financial advice. Figures are illustrative; rates and limits change — verify before acting. Mintmark may earn from advertising and partner links; our conclusions stay our own. How we make money.
