Falling in love with a house before you know your real budget is one of the most stressful ways to shop. You tour a place, picture your furniture in it, and only afterward try to reverse-engineer whether the payment fits. Sometimes it does. Often it doesn’t, and the disappointment stings more than if you’d never walked through the door. The listing price on a home tells you almost nothing about whether you can actually afford it, because the price isn’t the payment, and the payment is what you live with every month for years.

The good news is that “how much house can I afford” is a math question before it’s an emotional one, and the math is not complicated. You just need to put the right numbers in the right places and let them talk to each other. A simple how much house can I afford spreadsheet does exactly that: you enter your income, your debts, your down payment, and an example interest rate, and it hands back a realistic price range instead of a wishful one.

Start With the 28/36 Rule

Lenders have used the 28/36 rule as a sanity check for decades, and it’s still a useful anchor even though it isn’t a law. The idea is straightforward. Your total housing payment should generally stay at or below 28% of your gross (pre-tax) monthly income, and all of your monthly debt payments combined, housing included, should stay at or below 36%. That second number is your debt-to-income ratio, and it’s one of the first things an underwriter looks at.

Here’s how it plays out with round numbers. Say your household earns $90,000 a year, which is $7,500 a month before taxes. The 28% guideline puts your target housing payment around $2,100 a month. The 36% guideline caps your total debt at about $2,700 a month, so if you already pay $500 toward a car loan and student loans, you’d want housing closer to $2,200 or less to stay inside the rule. When the two numbers disagree, the lower one wins.

Treat these percentages as a ceiling, not a target. Just because a lender will approve you at 36% doesn’t mean a payment that large will feel comfortable once you’re also paying for maintenance, utilities, and the occasional surprise repair. Plenty of people are happiest buying below what they qualify for.

Don’t Confuse Principal and Interest With PITI

A common and expensive mistake is budgeting only for the loan itself. The mortgage payment you see quoted is usually just principal and interest, the part that repays what you borrowed. Your actual monthly obligation is PITI: principal, interest, taxes, and insurance. Property taxes and homeowners insurance are typically collected along with your payment and held in an escrow account, and they can add hundreds of dollars a month depending on where you live.

Imagine a $350,000 loan at an illustrative 6.75% over 30 years. The principal and interest alone would run roughly $2,270 a month. Now add property taxes, which might be $400 a month in one area and $650 in another, plus homeowners insurance of perhaps $120 a month. Suddenly a payment you thought was $2,270 is closer to $2,800, and that’s before any HOA dues. If you shopped based on the P&I figure, every house in your search would be about 20% too expensive. This is precisely where buyers get caught, and it’s why a spreadsheet that itemizes each piece of PITI keeps your search honest.

The Down Payment and PMI Tradeoff

Your down payment does two jobs. It lowers the amount you borrow, and it determines whether you’ll pay private mortgage insurance. On a conventional loan, putting down 20% generally lets you skip PMI. Put down less, and you’ll usually pay it until you’ve built up enough equity, which adds tens or even a couple hundred dollars to your monthly cost for a while.

There’s no universally correct answer here. Waiting to save a full 20% means more time renting and more time out of the market, while buying sooner with 5% down gets you in the door but adds PMI and a larger loan. The right move depends on your timeline, your local prices, and how quickly you can save. What helps is seeing both paths laid out next to each other with real numbers, so you’re choosing rather than guessing. If you’re early in the process, our first-time home buyer budget guide walks through the full set of costs from offer to move-in, including the ones that don’t show up in any mortgage calculator.

Back Into a Price From a Payment

The most useful way to shop is backwards. Instead of asking “can I afford this $420,000 house,” decide what monthly payment you actually want to live with, then work out what price that supports.

Start with your comfortable total payment, say $2,400 a month. Subtract your estimated taxes, insurance, and any PMI or HOA to isolate the principal-and-interest budget. If taxes, insurance, and PMI come to $600, you have $1,800 left for P&I. At an example rate of 6.75% over 30 years, roughly $1,800 in principal and interest supports a loan of about $277,000. Add your down payment, and that’s your target purchase price. Change the interest rate by even half a percent and that borrowing power shifts noticeably, which is why running several rate scenarios is smart rather than optional.

This is tedious to do by hand and effortless in a tool built for it. Enter income, debts, down payment, taxes, insurance, and a rate, and you immediately see the maximum comfortable price along with the resulting monthly breakdown. Nudge any input and everything recalculates, so you can test “what if rates rise” or “what if we put down another $10,000” in seconds instead of rebuilding the math each time.

A quick word on the rates and figures above: they’re illustrative examples chosen to show how the pieces fit together, not quotes for today’s market. Your own numbers will depend on current rates, your credit, your location, and your lender, so plug in real quotes when you have them.

Once you know your number, the next question is how to pay the least interest over the life of the loan. That’s a whole topic on its own, and it’s worth reading how to pay off your mortgage faster with extra payments before you sign, because small decisions at the start compound for decades.

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The Loan & Mortgage Payoff Calculator spreadsheet is built to answer exactly these questions. It calculates your monthly payment and full PITI, applies affordability ratios like the 28/36 rule so you can back into a realistic price, and lets you compare down payment and rate scenarios side by side. It includes a complete amortization schedule and an extra-payment planner, and it works in both Excel and Google Sheets.

If you want the full toolkit, the Home Buying Bundle packages this calculator with three more spreadsheets for $24.99, the get-all-four option for buyers who’d rather have every stage of the purchase covered in one place.