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In short: Cover closing costs of 10–15 % from your own cash and keep the monthly payment near 35 % of household net income — that keeps the financing genuinely affordable.

Buying a Home: How Much House Can You Afford?

Kontoo editorial team · Updated 06/22/2026

Buying a home is often the biggest financial decision you will ever make. Running the numbers honestly first is what lets you sleep soundly afterward.

  • Size up your down payment and cash for closing costs (taxes, notary or legal fees, agent) — together often 10–15 % of the price, which lenders usually expect you to cover yourself.
  • Set an affordable monthly payment: aim to keep it under roughly 35 % of your household net income.
  • Understand the payment as interest plus principal — a higher principal share shortens the loan and the total interest you pay.
  • Estimate the remaining balance when your fixed-rate period ends and stress-test it against a higher refinancing rate (mortgage calculator).

What matters

The most common mistake is fixating on the purchase price and forgetting the costs around it: on a €400,000 home, taxes, notary or legal fees and an agent can easily add around €50,000 — money lenders usually will not finance. Just as overlooked is refinancing risk: in many markets the rate is fixed for only 10 or 15 years, after which a remaining balance must be refinanced at a then-unknown rate. Start with a 1 % principal share and after 10 years almost the whole loan is still outstanding; 2 % or more is far more realistic. Budget for upkeep too — as an owner you pay for the roof, heating and repairs yourself, often 1–1.5 % of the building value each year. And do not borrow to the bank's absolute ceiling; choose a payment that still works through illness, parental leave or a job change.

ExampleOn a €350,000 loan at a 4 % rate with a 2 % starting principal share, the yearly payment is 6 % = €21,000, about €1,750 a month. After a 10-year fixed period, roughly €264,000 is still owed.
Run price, closing costs, payment and remaining balance in one go with the mortgage calculator.

Checklist

  • Closing costs (10–15 %) covered from your own cash?
  • Monthly payment at most around 35 % of household net income?
  • Principal share of at least 2 % to limit the loan term?
  • Remaining balance stress-tested at a higher refinancing rate?

Common myths

Myth: Renting is throwing money away; buying always pays off.

Reality: Owning also has costs that build no equity — interest, closing costs and maintenance. Whether buying or renting is cheaper depends on price, rate, local rents and how long you stay.

Myth: A low starting principal makes the house affordable.

Reality: A low principal share only lowers the payment short-term; it stretches the loan for years and leaves a large balance, raising the risk when you refinance.

Frequently asked questions

How much down payment do I need to buy a house?

Plan to cover closing costs of 10–15 % of the price yourself, ideally plus another 10–20 % toward the price. A larger down payment usually means a lower rate and a smaller monthly payment.

Why does my payment stay the same while the balance falls?

A fixed payment splits into interest and principal. Early on most of it is interest; over time the interest share shrinks and more goes to principal, so the balance drops faster while the payment holds steady.

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All lessons · Glossary · Editorial · Kontoo does the math and explains – this is general education, not tax, legal or financial advice.

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