How Much House Can I Afford?

There's a gap between two numbers most homebuyers don't see until they're under contract: what the bank approves you to borrow, and what you should actually borrow. They're rarely the same. We've watched plenty of buyers get pre-approved for $450,000, hear the loan officer cheerfully announce that figure, and then assume that's the right number to shop with. It almost never is.

The bank's job is to make sure you can pay them back. That's it. They're not optimizing for whether you'll have anything left over for retirement, or whether one slow quarter at work would push you to choose between the mortgage and the car payment. The lender's affordability rules are a ceiling — a "you won't default" ceiling — not a "you'll thrive" floor. Knowing the difference is what this article is really about.

We'll walk through how the US, France, and UK calculate maximum borrowing, then layer in what the rules don't measure. The numbers are real. The opinions are ours.

The US 28/36 Rule

In the US, almost every lender's affordability check starts with the 28/36 rule. It's the industry standard — so simple you can do it on a napkin. The CFPB's homebuyer education materials reference the same framework.

How it works: your monthly housing costs (PITI — principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income. Your total monthly debt service — that's the mortgage plus every other recurring debt obligation: car loans, student loans, minimum credit card payments — should not exceed 36% of gross monthly income.

Let's make this concrete. Suppose you earn $80,000 per year. Your gross monthly income is $6,667. The 28% rule says your maximum monthly housing payment is 28% of $6,667, which equals $1,867. That's your ceiling for PITI combined.

Now, how much house does that buy you? That depends on your down payment, the interest rate, and the loan term. At today's rates — let's assume 6.5% on a 30-year mortgage with a 20% down payment — that $1,867 monthly payment gets you approximately a $295,000 home.

Here's the trap: $295,000 is what the lender will approve. It is not what you should necessarily borrow. The 28/36 rule was designed in the 1970s to keep banks from going under during the next downturn — not to make sure you have $400 left over each month for groceries, daycare, and the occasional dishwasher repair. Lifestyle creep does the rest. We've watched borrowers approved at the 28% ceiling find themselves quietly cash-strapped within two years, never having grasped that the bank's "yes" wasn't actually a vote of confidence in their wider finances.

The 36% total debt ratio is equally important. That $80,000 salary allows you a maximum of $2,400 in total monthly debt payments. If you already have $400 in car loans and $200 in student loans, you're down to $1,800 for your mortgage — well below the 28% housing ceiling. This is why many borrowers who qualify for larger mortgages end up taking smaller ones; their existing debts consume part of the allowed ratio.

France: The Strict 33–35% Rule (Taux d'Endettement)

France takes a harder line on mortgage affordability than the United States. Since 2022, the High Council on Financial Stability (HCSF — Haut Conseil de Stabilité Financière) has enforced a strict cap: your total debt service, including your mortgage payment, property taxes, insurance, and all other debts, cannot exceed 35% of your gross monthly income.

In practice, most French banks reject applications above 33%. There's almost no negotiation. If your debt service ratio exceeds the cap, you're denied — period. There's no equivalent to the US 36% threshold where lenders might stretch for a good borrower.

Why such a tight cap? The French financial regulator learned lessons from the 2008 crisis. It wanted to prevent a repeat of over-lending and to protect borrowers from taking on mortgages they couldn't service. The rule also reflects France's higher cost of living compared to the US and its slower wage growth.

The stress test is less common in France. The cap itself is the test. If you pass the 33–35% ratio at your current interest rate, you're approved. Lenders don't typically apply a stress test at a higher rate — the ratio itself is conservative enough.

For a French household earning €50,000 annually (€4,167 monthly), the 35% cap means maximum debt service of €1,458 per month. If that's your only debt, most of that budget goes to the mortgage. If you have a car loan or student debt, your home budget shrinks accordingly.

One more distinction: the French cap includes property taxes (taxe foncière) and mandatory home insurance (assurance habitation) in the calculation. In the US, these are part of PITI but aren't universally required by law in every state. This makes the French rule genuinely more stringent. A borrower who qualifies at 35% in France is taking on less total risk than a US borrower at 28%, because the French figure already accounts for taxes and insurance.

UK: The Affordability Stress Test

The United Kingdom approach sits between the US and France. Rather than a single rigid ratio, UK lenders must pass what's called the affordability stress test, set by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

The test works like this: a lender approves you based on the current interest rate, but then stress-tests whether you could still afford the mortgage if the Standard Variable Rate (SVR) rose by 3 percentage points. If rates are currently 5.5%, the test assumes 8.5%. Can you still pay? If yes, you're approved. If no, the lender must reduce the amount they'll lend.

Income multiples also matter. Most UK lenders will lend you 4 to 4.5 times your annual gross income. First-time buyers might qualify for 5 times. So if you earn GBP 50,000 annually, expect to borrow somewhere between GBP 200,000 and GBP 250,000, depending on your interest rate and debts.

The stress test is far more lenient than France's hard cap, but stricter than the US 28/36 rule. It's designed to protect borrowers from rate shocks while still allowing reasonable lending.

Why stress-test at SVR + 3%? The logic is simple: interest rates rise. If you can't afford your mortgage when rates jump, you'll struggle. The FCA introduced the stress test after the 2008 crisis, when thousands of UK borrowers defaulted because they'd been approved for mortgages they could only afford at low rates. The +3% cushion is conservative but realistic — it's happened twice in UK history (2008 and 2022).

Worked Examples: Three Markets, Three Affordability Ranges

Let's put these rules to work with real salary bands across the three markets. We'll use the mortgage calculator assumptions: 6.5% interest, 30-year term, 20% down payment (US and France), 15% down (UK, common for first-time buyers).

Notice the difference in purchasing power. In the US, an $80,000 salary buys you a $295,000 home. In France, a €50,000 salary (roughly equivalent in take-home) gets you only a €218,000 home. In the UK, GBP 50,000 (similar purchasing power) qualifies you for roughly GBP 235,000, but the stress test caps lending conservatively.

Why the gap? France's stricter 33% cap, combined with higher property taxes and mandatory insurance, leaves less room for mortgage payments. The UK's stress test also acts as a brake. The US 28/36 rule is more permissive — which is why US mortgage debt as a percentage of GDP is historically higher than in Europe.

A second factor is down-payment expectations. The US examples assume 20% down, which is typical but not required — FHA loans allow 3.5% down. The UK examples assume 15% down, which also reflects a typical first-time buyer. France typically requires 15-20%. Smaller down payments mean higher loan amounts and higher monthly payments, further constrained by the affordability ratios.

What the Rules Miss: "Qualifying" Is Not the Same as "Affordable"

Here's what lenders don't tell you: passing their affordability test doesn't mean you can actually afford the home.

A lender cares about one thing: whether you'll default on the loan. They don't care whether you'll have money left over for a vacation, whether you're saving for retirement, or whether a single emergency could wipe you out. The 28% and 33% rules were designed in the 1970s and 1980s. They haven't been updated to reflect modern cost of living.

Consider property taxes and insurance. In the US, these vary wildly by location. In high-tax states like New Jersey or Illinois, property taxes might consume 1.2% of your home's value annually. In Texas or Florida, closer to 0.8%. That's a real spread that affects your monthly budget.

Insurance is another variable. A home in a flood zone, wildfire zone, or hurricane area costs far more to insure than a suburban home in a stable climate. The 28% rule doesn't distinguish between them.

Our take: the more honest target is the 25% rule — total housing cost (PITI plus HOA) capped at 25% of gross income. By that standard, lots of borrowers approved at 28% are quietly overleveraged. At France's 33%? Almost all of them.

And then there's the part the rules don't even attempt to measure: job security, the bonus that doesn't repeat, the commute that turns out to cost $400/month in gas, childcare that adds $1,800/month overnight, the roof that needs replacing at year 18 ($12,000), the HVAC at year 15 ($8,000), the water heater that fails on a Tuesday. Houses are not expenses — they're things that quietly break for the next 30 years. The 28% rule doesn't see any of this.

The strongest single move you can make before signing: take whatever you've been approved for, subtract your emergency fund target (3–6 months of expenses), subtract your annual retirement savings, and see what's left. If the remainder makes you uncomfortable — bid lower. There's no shame in buying a $260,000 home when you qualify for $295,000. The borrowers we've seen struggle most are uniformly the ones who took the maximum.

One more thing worth doing in the calculator: shock-test your rate. If you locked in at 6.5%, run the same numbers at 7.5%. If a 1% rate move would tip you from comfortable into stretched, you're already too close to the edge.

You should also read our guides on how mortgage payments work and PMI explained to understand the full cost of borrowing at different down-payment levels. These guides will show you why a smaller down payment might mean 10-15 years of extra insurance costs, and help you decide whether stretching your budget is worth it.

The bottom line: affordability is personal. The rules are a floor, not a ceiling. Start with the calculator, run the numbers, and then ask yourself the harder question — not "How much can I borrow?" but "How much do I actually want to owe?"