The Napkin Math: How Much House Can You Actually Afford?

Jacqueline OShaughnessy
Jul 18
6 min read

By Jacqueline O'Shaughnessy, Loan Officer / Private Capital, NMLS #382900 — South Wind Financial, Inc, NMLS #9462 — Las Vegas, NV

A first-time buyer guide you can do with a pen, a napkin, and five minutes.

Home affordability worksheet showing mortgage payment calculations for first-time homebuyers.

Meet Emily

Emily has rented the same apartment for four years. Every time rent goes up, she thinks the same thing: "I should just buy a place.

And every time, the same wall goes up: "I don't think I can afford to buy." She's not afraid of owning a home. She's afraid of the phone call. Calling a loan officer feels like walking into a final exam she didn't study for. What if her credit isn't good enough? What if she doesn't have enough saved? What if they laugh?

So she does what most renters do: nothing. Another lease renewal. Another rent increase.

Here's what Emily doesn't know: the question she's afraid to ask has a five-minute answer. She doesn't need a finance degree. She needs a napkin. How much hose can I afford?

The Doubts (You Probably Have Them Too)

"I don't have 20% for a down payment." Most first-time buyers don't. FHA loans start at 3.5% down, and down-payment-assistance programs exist in almost every state.
"My credit isn't perfect." Perfect isn't the requirement. Many loan programs work with scores in the 580–620 range and up.
"What about closing costs?" Real, but often negotiable, sometimes covered by seller credits or assistance programs.
"I don't even know what payment I could handle." That's the one we're solving today and it's the easiest one on the list.

One quick note before the math: lenders generally want to see 2 years of work history in the same field. It doesn't have to be the same employer — just the same line of work. Emily has been in her field for six years. Box checked.

Now, the napkin. What Payment Can I Handle?

How much home can I afford? Simple mortgage math guide for first-time homebuyers by Jacqueline O'Shaughnessy.

Rule #1: The Half Rule (What the Bank Is Actually Checking)

This is a simplified version of what lenders call your debt-to-income ratio (DTI) — and it's the closest thing to "the bank's math" you can do at home.

Step 1. Write down your gross monthly income (before taxes).

Step 2. Divide it in half. That's roughly the most total monthly debt a lender will allow you to carry.

Step 3. Subtract your existing monthly debt payments — car payment, student loans, credit card minimums, personal loans. (Not utilities, groceries, or streaming — only debts that show on your credit report.)

Step 4. What's left is your maximum home payment.

And here's the part people miss: that number isn't just your mortgage. It has to cover the whole payment:

Principal + Interest + Property Taxes + Homeowners Insurance + HOA dues (if any) + Mortgage Insurance (if any)

Lenders call this the full housing payment (you'll hear "PITI"). If your napkin math says $2,200, that $2,200 includes everything it takes to keep the house.

Scenario 1: Emily runs her numbers: How much home can she afford?

Emily earns $72,000 a year, which is $6,000 a month gross.

Step	Math	Result
Gross monthly income	—	$6,000
Divide in half	$6,000 ÷ 2	$3,000 max total debt
Car payment	– $425
Student loans	– $275
Credit card minimums	– $100
Personal loans	– $0
Other debts	– $0
Total monthly debts		$800
Max home payment	$3,000 – $800	$2,200/month

Emily's ceiling is a $2,200 all-in monthly payment | taxes, insurance, HOA, everything. Her current rent is $1,850. Suddenly this doesn't feel impossible.

Scenario 2: Marcus and Dana (two incomes, more debt)

Marcus and Dean earn $9,500 a month combined. How much house can they afford?

Step	Math	Result
Gross monthly income	—	$9,500
Divide in half	$9,500 ÷ 2	$4,750 max total debt
Two car payments	– $850
Student loans	– $300
Credit card minimums	– $150
Personal loan	– $250
Other debts	– $0
Total monthly debts		$1,550
Max home payment	$4,750 – $1,550	$3,200/month

Same napkin. Same five minutes.

Reality check: The Half Rule shows your maximum, the top of the range a lender might approve. Your comfortable payment may be lower, which is exactly why Rule #2 exists.

Rule #2: The 33x Rule (Your Conservative Price Target)

The Half Rule tells you your maximum payment. This rule gives you a quick, conservative purchase price target:

Monthly gross income × 33 ≈ a comfortable home price

Emily: $6,000 × .33 = $198,000

Marcus and Dana: $9,500 × .33 = $313,500

This is intentionally conservative, a "sleep well at night" number, not a maximum. Depending on your rates, taxes, and debts, you may qualify for more. But if you buy at or below your 33x number, you're building in breathing room from day one.

Bonus Rules of Thumb

(Same Napkin, Different Angles)

The 28/36 Rule * the classic. Keep your housing payment under 28% of gross monthly income, and all debts combined under 36%. For Emily: 28% of $6,000 = $1,680 housing, and $2,160 total debt. Tighter than the Half Rule — think of 28/36 as "comfortable" and the Half Rule as "maximum."

The Rent + Savings Test * the gut check. Take your current rent and add what you consistently save each month. If you can genuinely set aside that total without stress, that's strong evidence of the payment you can handle — because you're already handling it.

The 3x Annual Income Rule * the quick price check. A home price around 3 times your annual income is a time-tested target. Emily: $72,000 × 3 = $216,000 — nicely in line with her 33x number. When two rules of thumb agree, trust the neighborhood they point to.

The Solution: From Napkin to Real Number

Emily's napkin says $2,200 a month and a price target around $200,000. That's not a guess anymore, that's a starting point.

The next step turns the napkin into something a seller will take seriously: a pre-approval. I will verify your income, check your credit, and hand you two things Emily never had before:

A real monthly payment — with actual taxes, insurance, and today's rates built in
A letter that tells sellers you're a serious buyer

The call Emily was dreading? It took 15 minutes. No exam. No judgment. Just her napkin numbers, confirmed.

Your Turn

You just did more homework than most renters ever do. You have a payment ceiling and a price target

Ready to turn your napkin into a pre-approval?

Book a free 15-minute call 702-429-3994

Bring your napkin. We'll bring the calculator.

Or start your application online

It takes about the same time as renewing a lease.)

Frequently Asked Questions

How much house can I afford on my salary? A quick estimate: divide your gross monthly income in half, then subtract your monthly debt payments (car, student loans, credit card minimums). The result is roughly your maximum total monthly housing payment, including principal, interest, taxes, insurance, and HOA dues. For a conservative purchase price, multiply your gross monthly income by 33.

What is included in a monthly mortgage payment? A full housing payment includes principal, interest, property taxes, homeowners insurance, HOA dues if applicable, and mortgage insurance if applicable. Lenders count all of these when qualifying you.

How much work history do I need to qualify for a mortgage? Most loan programs look for two years of work history in the same field. It does not need to be with the same employer.

Do I need 20% down to buy a house? No. FHA loans allow as little as 3.5% down, some conventional programs allow 3% down, and down-payment-assistance programs are available in most states for eligible buyers.

What is the 28/36 rule? A budgeting guideline: keep your housing payment under 28% of gross monthly income and your total debt payments under 36%. It's more conservative than typical lender maximums.

What credit score do I need to buy a home? Many programs work with scores from roughly 580–620 and up, though better scores typically earn better rates. A loan officer can review your specific situation for free.

This guide provides general information and rules of thumb, not a loan approval or financial advice. Actual qualification depends on your complete financial picture, current interest rates, and program guidelines. Contact a licensed loan officer for numbers specific to you.