Here is my approach to the 'how much house can I afford?' question, which I think most advice gets wrong.

The standard guidance — spend no more than 28% of gross income on housing — was developed in an era of lower housing costs and higher interest rates. It's a rough rule, not a precise limit.

More useful questions:

• After the mortgage payment, property tax, insurance, and estimated maintenance, can you still save at least 15% of gross income for retirement?
• Can you handle a 20% increase in costs (rate adjustment, repair, property tax reassessment) without financial distress?
• Is the monthly payment less than what you'd pay in rent for equivalent housing? If not, how long until it becomes so (appreciation breakeven)?

The 28% rule can permit too much in a high-income household where 28% of gross is enormous, and too little in a low-income household where 28% leaves nothing for everything else.

I recommend working backwards from 'what do I have to invest and save after all housing costs?' rather than forward from 'what percentage rule says I can afford?'