Learning Library · Money Basics · lesson 2
How much house can you actually afford?
4 min read
The 28/36 guideline, what lenders will approve vs. what you should spend, and the costs first-timers miss.
The guideline
The classic yardstick: housing costs at or under 28% of gross monthly income, and all debt payments combined under 36% — though many loans approve well above that. Which reveals the real point: the lender's maximum is not a recommendation. It's a ceiling computed from ratios that don't know about your childcare, your travel, or your savings goals. Buy at your number, not theirs.
The costs beyond the mortgage
- Property taxes — a significant and varying line around Philadelphia and Montgomery County
- Insurance, and utilities on a whole-house scale
- Maintenance — the old 1%-of-value-per-year rule of thumb exists for a reason, especially in older stock
- HOA or condo fees where applicable
- The cash cushion after closing — moving straight into a paycheck-to-paycheck homeownership is the stress nobody prices in
Quick answers
Should I buy at my pre-approval amount?
Your pre-approval is the ceiling the math allows, not the budget the life supports. Most of our happiest clients bought under it.
Educational content only — not legal, tax, or financial advice. Program details, rates, and tax figures change; verify current specifics before relying on them. The Woods Team · Berkshire Hathaway HomeServices Fox & Roach, REALTORS® · Equal Housing Opportunity.