The mortgage broker's answer to "how much house can you afford" is the maximum the lender will hand you. That is almost always more than you actually want to pay. The realistic answer in 2026 — with rates higher than the 2010s, insurance climbing, and property taxes resetting — looks closer to "noticeably less than what the bank will lend you, plus an honest accounting of the things they leave out of the calculator."
The two rules of thumb still worth using
The 28/36 rule
- Housing costs (mortgage principal + interest + property tax + insurance + HOA / maintenance fund) should not exceed 28% of gross monthly income.
- Total debt payments (housing + car loans + student loans + credit cards) should not exceed 36% of gross monthly income.
This is a ceiling, not a target. A more conservative 25/30 is increasingly realistic for couples and families who do not want to live in financial pressure. Your future self will thank you for the buffer.
The 25% net rule
An alternative framing that ignores gross income (which most people never see) and works on take-home pay: housing costs ≤ 25% of monthly take-home pay. Easier to feel; usually produces a more sustainable answer than the 28/36 rule for households without big tax-advantaged retirement contributions.
What the bank's calculator leaves out
Mortgage calculators show principal and interest. Reality includes a lot more.
Property taxes
Range wildly — 0.3% to 2.5% of property value annually depending on country and region. On a €400,000 home in a 1.5% region, that is €6,000 a year, or €500 a month — same magnitude as the loan payment in some places. Look up the exact figure for the specific property, not the area average.
Insurance
Home insurance has risen 15–25% in many regions in 2026. Get a real quote on a specific property before you buy. In flood, fire, or earthquake zones, expect significantly higher premiums or required additional coverage.
Maintenance and repairs
The forgotten line. The realistic budget is 1–2% of property value annually for ongoing maintenance, with bigger lumps every 7–15 years (roof, HVAC, water heater, appliances). On a €400,000 home, that is €4,000–€8,000 a year on average. Most first-time buyers under-budget this and feel "house poor" within two years.
HOA / building fees / co-ownership charges
Common in apartments, townhouses, and gated communities. €100–€600+ per month, often with assessment surprises every few years. Read the building's reserve fund history before buying — if the fund is thin, expect special assessments soon.
Closing and moving costs
One-time, but real. 2–6% of the purchase price in many countries (notary fees, transfer taxes, lender fees, inspections, appraisal). Add €2,000–€5,000 for moving and immediate repairs. Plan for them; do not let them gut your emergency fund.
Worked example — what €100k of household income really buys
A couple making €100,000 gross combined, with €1,500/month of other debt (car + student loan), in a moderate property-tax area:
- 28% of gross = €2,333/month max housing costs.
- Subtract estimated taxes (€400) + insurance (€100) + maintenance reserve (€300) = €1,533 left for principal + interest.
- At a 6% 30-year fixed mortgage, that monthly P&I supports a loan of about €255,000.
- With a 20% down payment, the maximum total purchase: roughly €320,000.
The bank may approve them for a €450,000 home. The math says €320,000 is the comfortable ceiling. The €130,000 gap is "pre-approval theater" — what you can borrow, not what you should.
The lifestyle questions the bank does not ask
- Are you maxing out retirement accounts? If a higher mortgage payment means cutting retirement contributions, the long-term cost is enormous.
- How stable is your income? Self-employed, commission-based, or in a volatile industry? Use a more conservative ratio. Bank lenders do not adjust for this; you must.
- Do you plan kids in the next five years? Childcare in many cities runs €1,000–€2,500 a month per child. That eats budget that did not exist on the calculator.
- Will one income disappear temporarily? Parental leave, sabbaticals, illness. A house affordable on two incomes can become a crisis on one.
- How long do you actually intend to live here? Closing and moving costs typically take 5–7 years to amortise. Buying for a 2-year stay rarely works financially.
The down payment question
The "20% down" rule of thumb still works, but with nuance:
- Less than 20% down usually triggers private mortgage insurance (PMI) or higher rates, eating into your monthly budget for years.
- More than 20% down reduces monthly payments and risk but ties up cash. If you are wiping out your emergency fund to hit 25%, you are buying short-term risk for marginal benefit.
- The right level for most households: 20–25%, with at least 6 months of mortgage payments still in the emergency fund after closing.
Renting versus buying
The "renting is throwing money away" line is one of the most expensive pieces of folk wisdom in personal finance. The honest comparison includes:
- Mortgage interest (often more than the equivalent rent in the early years).
- Property tax.
- Maintenance.
- Insurance.
- Closing/moving costs.
- Opportunity cost of the down payment in alternative investments.
Tools like the NYT Buy vs Rent calculator give a useful comparison. In many cities in 2026, renting is genuinely cheaper for stays under 5–7 years. Buying still pays off long-term in most stable markets, but the "always buy" line is dead.
Bottom line
How much house you can afford in 2026 is significantly less than what the bank will lend you, once you account for taxes, insurance, maintenance, and a real life that includes retirement contributions, possible kids, and the occasional vacation. Use the 28/36 rule as a ceiling, the 25% net rule as a target, and treat the realistic monthly carry — not the loan amount — as the number that matters. Stretch to afford the lifestyle, not the address. The houses people regret are almost never the ones they bought slightly under budget.