How Much House Can I Afford – Quick Guide

Want to know the right price range for your next home? The first step is not to guess – it’s to work out a clear budget based on what you earn, what you owe, and how much you can put down. This guide breaks it down into easy steps so you can see a realistic price range before you start looking at listings.

Figure Out Your Income & Expenses

Start with your total monthly take‑home pay. Then list every regular outgo: rent or mortgage on your current place, utilities, transport, food, insurance, subscriptions and any loan repayments. Subtract those costs from your net income – the leftover is what you can safely allocate to a new mortgage. A common rule is to keep housing costs (mortgage, tax and insurance) under 30‑35% of your net pay. If you make £3,500 a month, aim for a monthly mortgage payment of about £1,100‑£1,200.

Use a Mortgage Calculator & Check Rates

Plug your numbers into a free online mortgage calculator. Enter the loan amount you think you can manage, the interest rate you’re offered, and the term (usually 25‑30 years). The tool will show your monthly payment, how much interest you’ll pay over the life of the loan, and the total cost.

Interest rates can swing a lot, so check a few lenders. Even a 0.5% difference changes your payment by over £50 a month on a £200,000 loan. If rates are high, consider a shorter term or a larger deposit to keep payments down.

Speaking of deposits, a bigger down payment lowers the loan amount and may get you a better rate. Most banks like to see at least 10% of the purchase price, but 20% is ideal. For a £250,000 house, a £50,000 deposit cuts the loan to £200,000 and can shave a few hundred pounds off your monthly bill.

Don’t forget your credit score. Lenders use it to decide how risky you are. A score above 750 usually unlocks the best deals. If your score is lower, work on paying down credit cards and fixing any errors before you apply.

Other costs matter too. In the UK you’ll pay stamp duty, legal fees, survey costs and possibly moving expenses. Add another 2‑3% of the purchase price to your budget to cover these. Forgetting them can leave you short on cash after you’ve signed the contract.

Once you have a clear number – say you can afford a £300,000 house with a £30,000 deposit – start searching in that price band. Use filters on property sites to stay within range and avoid wasting time on listings you can’t afford.

If you’re a first‑time buyer, check government schemes like Help to Buy or local down‑payment assistance. These can add a few thousand pounds to your purchasing power without raising your loan size.

Finally, get a pre‑approval from a lender. It shows sellers you’re serious and gives you a firm ceiling on what you can spend. Pre‑approval also highlights any hidden issues in your financial picture before you fall in love with a property.

Knowing how much house you can afford isn’t a magic number – it’s a range that fits your life, your goals, and your budget. Use the steps above, play with the calculators, and you’ll walk into viewings with confidence. Happy house hunting!