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Open the Mortgage Calculator →Before falling in love with a property, it is essential to know your budget ceiling. Buying more house than you can comfortably afford is one of the most common financial mistakes — and one of the most damaging. Here are the frameworks lenders and financial planners use to determine affordability.
The standard affordability guideline used by most US lenders is the 28/36 rule:
On a $80,000/year salary ($6,667/month), the 28% rule allows up to $1,867/month in housing costs.
| Annual Salary | Max Monthly Housing (28%) | Approx. Home Price (7% rate, 20% down, 30yr) |
|---|---|---|
| $50,000 | $1,167 | ~$165,000 |
| $75,000 | $1,750 | ~$245,000 |
| $100,000 | $2,333 | ~$330,000 |
| $150,000 | $3,500 | ~$495,000 |
Your down payment directly affects your monthly payment and whether you pay Private Mortgage Insurance (PMI). In the USA, putting down less than 20% triggers PMI, typically 0.5–1.5% of the loan amount per year, adding $100–$300/month to your costs.
UK lenders typically use income multiples rather than percentage rules. Most lenders will offer 4 to 4.5 times your annual income, with some offering 5–5.5 times for high earners. On a joint income of £80,000, you could typically borrow £320,000–£360,000.
South African banks generally apply a 30% of gross income rule for bond repayments. At prime rate (~11.75% in 2024), a R1,500,000 bond costs approximately R16,500/month. You need a gross income of around R55,000/month to qualify.
First-time buyers consistently underestimate the ongoing costs of ownership:
Enter your home price, down payment, rate, and term to see your monthly payment, total interest, and full 30-year schedule.
Calculate My Mortgage →Lender pre-approval tells you the maximum you can borrow — not the maximum you should borrow. Just because a bank will lend you $450,000 does not mean that is a wise use of your income. Always leave room for other financial goals: retirement savings, emergency fund, and quality of life. A home that stretches your budget to breaking point is a financial trap, not an asset.