How Much House Can I Really Afford?
Banks answer this with ratios. Real life answers it with runway, margin, and how fast things break.
Why bank formulas are incomplete
Traditional affordability rules (28/36, DTI limits, etc.) assume stable income and predictable costs. Real life doesn’t work that way. Most mortgage failures happen because expenses rise or income falls, not because the original payment was “too high.”
The 3-question affordability test
- Margin: How much money do you have left each month?
- Runway: How long do savings last if that margin turns negative?
- Sensitivity: How small a change breaks the budget?
What usually breaks affordability
- Income variability or job disruption
- Property tax and insurance increases
- Underestimated maintenance and utilities
- Life changes after purchase
A safer definition of “affordable”
A home is affordable if you can absorb common shocks without immediate financial stress. That means positive or near-neutral margin under stress and several months of runway.
Use the Mortgage Stress Test Tool to test affordability the way life actually works.