Picture this: you’ve found a home that checks all your boxes, the photos look amazing, and your agent says it’s “a great price for the area.” Still, a quiet voice in your head asks, “Can I really afford this every month?” That question matters more than any listing, and having a simple formula can keep your future self from feeling squeezed once the excitement fades.
1. Start with your take-home pay
Think about what actually hits your checking account after taxes, health insurance, and retirement contributions. That’s your real spending power, not the bigger number on your offer letter. A practical target for 2026 buyers is to keep all housing costs between 25% and 30% of this take-home pay. Housing costs mean your mortgage payment, property taxes, homeowner’s insurance, and any homeowner association dues. If that total pushes much past 30%, day-to-day life can start to feel tight.
2. Add up true housing costs
Lenders often focus on principal, interest, taxes, and insurance, but your real monthly cost can include more. If the home is in an area with a homeowner association, include that fee. If you’re putting less than 20% down, add mortgage insurance. Then estimate utilities like heating, cooling, and water based on the region and square footage. A quick rule is to pull recent utility averages from similar homes or ask the seller for last year’s bills so you aren’t guessing.
3. Use the 50 / 30 / 20 guide
Once you know your take-home pay and true housing costs, plug them into a simple guide. Aim for about 50% of your take-home pay for needs: housing, basic groceries, transportation, childcare, and minimum debt payments. Keep around 30% for wants, like eating out, streaming, and hobbies. Reserve at least 20% for savings and extra debt payments. If the new house pushes your needs well over that 50% mark, you may need to adjust either the price range or your lifestyle expectations.
4. Stress-test next year’s budget
Life in 2026 might not look exactly like today, so test your numbers against a few realistic changes. Could your student loan payment resume or increase? Are you planning for a child, a job shift, or moving from roommates to living alone? Try trimming your take-home pay by 5% in your spreadsheet or notebook and see if the budget still works. If a small drop in income makes the payment unmanageable, that home might be stretching your comfort zone.
5. Prepare for surprise expenses
Owning a home here in the U.S. means repairs, maintenance, and things you simply didn’t notice at the showing. A worn roof, an older water heater, or a drafty window can turn into a bigger bill later. A common approach is to set aside 1% of the home’s price each year for upkeep, divided into a monthly transfer to savings. That cushion can keep you from putting repairs on a credit card every time something breaks.
When you slow down and run the numbers this way, the question “Can I really afford this house?” becomes less emotional and more about clear choices. Knowing how your payment fits with your everyday life, future goals, and savings plans gives you the confidence to move forward on your own terms, feeling prepared rather than pressured.
