How Much House Can I Afford? A Smarter, Simpler Way to Find Your Number

Buying a home is one of the biggest financial decisions you’ll ever make, and it starts with a simple but important question: 

How much house can I really afford? 

At Princeton Mortgage, we don’t believe in guesswork. We believe in helping buyers understand how lenders evaluate affordability—and how that number fits into real life. Our goal is to give you clarity, context, and confidence so you can focus less on spreadsheets and more on finding a home you love. 

Here’s what you need to know to get an honest, accurate view of your homebuying budget. 

What Lenders Look At—and How Princeton Mortgage Makes It Easier 

Mortgage affordability is generally evaluated using a few key factors, including: 

• Gross monthly income 

• Monthly debts 

• Credit profile 

These elements help determine what a borrower may qualify for under lending guidelines. 

A commonly used affordability guideline is the 28/36 rule, which is often applied when evaluating conventional loan scenarios. 

• Total housing expenses (principal, interest, taxes, and insurance) are typically capped at a percentage of gross monthly income. 

• Total monthly debt obligations—including new housing obligation and other debts—are also evaluated against income. 

At Princeton Mortgage, we go beyond automated calculations. We help you understand how these guidelines apply to your personal situation and how different choices can impact your comfort level over time. 

Why Approval Isn’t the Same as Affordability 

Qualifying for a loan amount doesn’t automatically mean it’s the right fit for your lifestyle. 

Affordability is personal. A smart buyer considers questions like: 

• Will this payment allow me to continue saving or investing? 

• How will this impact future goals or upcoming expenses? 

• Would I still feel comfortable if taxes, insurance, or other costs increase? 

Pro Tip: Lenders evaluate affordability using gross income, but building your personal budget around net (take-home) income can provide a more realistic picture of what feels comfortable month to month. 

How Interest Rates Can Affect Buying Power 

Interest rates play an important role in determining purchasing power and monthly obligations. Changes in rates can influence: 

• The price range you shop in 

• Long-term interest costs 

• Overall affordability 

At Princeton Mortgage, we walk borrowers through different loan structure scenarios, so they understand how market conditions may impact their options—before they start making offers. 

Property Taxes and Insurance: Costs Beyond the Loan 

Many online calculators focus only on the loan itself, but owning a home typically includes additional monthly expenses, such as: 

• Property taxes 

• Homeowners insurance 

• HOA dues (if applicable) 

• Flood or hazard insurance in certain areas 

These costs vary by location and property type. Our team helps estimate these expenses early so borrowers have a clearer picture of the full monthly obligation. 

Planning for Maintenance and Long-Term Costs 

Beyond the mortgage payment, homeowners should plan for ongoing upkeep. A common guideline is budgeting a percentage of the home’s value each year for maintenance and repairs. 

Older homes or properties with special features—such as pools or large yards—may require additional planning. Factoring this in early can help avoid surprises down the road. 

How Your Down Payment Impacts Your Loan 

Your down payment affects how much you borrow and may influence loan structure and insurance requirements. 

Key considerations include: 

• Conventional loans may require mortgage insurance if the down payment is below certain thresholds. 

• FHA loans have minimum down payment requirements and include mortgage insurance. 

• Down payment assistance programs may be available for qualified buyers.  

• 
  

To better assist you with making an informed decision, a Princeton mortgage loan officer can help you review these options and explain how different loan structures may affect your overall budget. 

Understanding Pre-Qualification, Pre-Approval, and Next Steps 

Buyers often hear terms like pre-qualification and pre-approval used interchangeably, but they are not the same. 

• Pre-Qualification: An initial estimate based on self-reported information. 
  

• Pre-Approval: Pre-approval is a lender’s conditional offer to lend a specific amount based on a review of your credit and the information you provide. It’s not required, but it can help you understand your estimated loan amount and show sellers you’re a serious buyer. 
  

• Pre-Commitment: A higher level of review that may include underwriter evaluation, subject to additional conditions. 

  
  

Timelines and outcomes vary based on individual circumstances, documentation, and underwriting review. Pre-approvals and pre-commitments are not guarantees of final loan approval. 

Affordability Should Feel Clear and Empowering 

Your mortgage should fit more than just lending guidelines—it should fit your life. 

At Princeton Mortgage, we focus on helping buyers understand their options, plan confidently, and move forward with clarity at every stage of the process. 

If you’re early in your search or already exploring homes, our team is here to help you evaluate affordability with honesty, transparency, and a strategy built around your goals. 

Ready to Take the Next Step? 

If you’re ready to explore how much home may be right for you, connect with a Princeton Mortgage Loan Officer. We’ll review your options, answer your questions, and help you build a plan that aligns with your financial goals.