How Much House Can I Afford in 2026?
Use the 28/36 rule, DTI ratios, and our interactive calculator to figure out exactly how much house you can afford based on your income.
The short answer: take your gross annual income, multiply by 3 to 4.5, and that is the home price range most lenders will approve. On a $100,000 salary, you can generally afford a home between $300,000 and $450,000 depending on your debts, down payment, and local taxes. But the real answer depends on several factors — here is exactly how to calculate it.
The 28/36 Rule Explained
The 28/36 rule is the standard guideline lenders use to decide how much mortgage you qualify for:
- 28% front-end ratio: Your total monthly housing costs (principal, interest, property tax, homeowners insurance, HOA, and PMI) should not exceed 28% of your gross monthly income.
- 36% back-end ratio: All monthly debt payments combined (housing costs plus car loans, student loans, credit cards, personal loans) should stay under 36% of gross monthly income.
28/36 Rule at Different Salaries
| Gross Annual Income | Monthly Gross | Max Housing (28%) | Max Total Debt (36%) |
|---|---|---|---|
| $75,000 | $6,250 | $1,750 | $2,250 |
| $100,000 | $8,333 | $2,333 | $3,000 |
| $150,000 | $12,500 | $3,500 | $4,500 |
If you earn $75,000 per year, your maximum monthly housing payment is $1,750. If you already carry $400 per month in car and student loan payments, your effective housing budget drops because lenders look at total debt load, not just the mortgage.
Understanding DTI (Debt-to-Income Ratio)
Your DTI ratio is the single most important number lenders evaluate. It equals your total monthly debt payments divided by your gross monthly income.
- Conventional loans typically cap at 43% DTI, though some approve up to 45% with strong compensating factors like high credit scores or large cash reserves.
- FHA loans allow up to 50% DTI in certain cases.
- VA loans use a residual income test instead of a hard DTI cap, but most lenders still prefer DTI under 41%.
- Add up all monthly debt payments (minimum credit card payments, auto loans, student loans, personal loans, child support)
- Add your expected monthly housing payment (principal, interest, taxes, insurance, PMI, HOA)
- Divide the total by your gross monthly income
- Multiply by 100 to get your DTI percentage
A DTI of 30% or lower gets you the best rates and easiest approvals. Between 36% and 43%, approval is possible but may come with a higher rate. Above 43%, most conventional lenders will decline you.
How Down Payment Changes What You Can Afford
Your down payment directly affects loan size, monthly payment, and whether you pay PMI:
| Down Payment % | Down Payment on $400K Home | Loan Amount | Monthly P&I (6.75%) | PMI? |
|---|---|---|---|---|
| 5% | $20,000 | $380,000 | $2,464 | Yes (~$190/mo) |
| 10% | $40,000 | $360,000 | $2,334 | Yes (~$150/mo) |
| 20% | $80,000 | $320,000 | $2,075 | No |
Putting 20% down on a $400,000 home saves roughly $389 per month in principal and interest compared to 5% down — plus you eliminate PMI entirely, saving another $150 to $400 per month depending on your credit score. That is a total monthly savings of $540 to $790.
FHA vs Conventional Down Payment
FHA loans require just 3.5% down with a 580+ credit score (10% down if your score is 500-579). Conventional loans start at 3% down for first-time buyers but 5% is more common. The trade-off: FHA loans charge MIP (Mortgage Insurance Premium) that stays for the life of the loan if you put less than 10% down. Conventional PMI drops off once you reach 80% loan-to-value.
Hidden Costs Beyond the Mortgage Payment
Your mortgage principal and interest is only part of the true monthly cost. Budget for these:
- Property taxes: 0.3% to 2.2% of home value per year depending on state. On a $400,000 home, that ranges from $100 to $733 per month.
- Homeowners insurance: $1,200 to $3,500 per year ($100 to $292 per month)
- PMI: 0.3% to 1.5% of the loan amount annually if your down payment is under 20%
- HOA fees: $0 to $500+ per month for condos and planned communities
- Maintenance: Budget 1% of home value per year ($333/month on a $400K home)
- Closing costs: 2% to 5% of the loan amount, due at closing (one-time cost of $6,400 to $19,000 on a $320K loan)
These hidden costs can add $500 to $1,500 per month on top of your base mortgage payment.
Income Needed for Different Home Prices
Here is the household income you need to afford homes at different price points, assuming 20% down, 6.75% rate, 30-year fixed, and the 28% rule:
| Home Price | Loan Amount | Monthly PITI (est.) | Income Needed |
|---|---|---|---|
| $300,000 | $240,000 | $2,056 | $88,000 |
| $400,000 | $320,000 | $2,658 | $114,000 |
| $500,000 | $400,000 | $3,261 | $140,000 |
| $600,000 | $480,000 | $3,863 | $166,000 |
These estimates include property tax at 1.1% and insurance at $200 per month. Your local numbers may vary — states like New Jersey and Texas have property taxes above 2%, which increases the income needed significantly.
How PMI Adds to Your Payment
If you put less than 20% down, PMI increases your monthly cost substantially. On a $380,000 loan (5% down on a $400K home):
- Credit score 760+: PMI rate ~0.3% = $95/month
- Credit score 700-759: PMI rate ~0.5% = $158/month
- Credit score 660-699: PMI rate ~0.9% = $285/month
- Credit score 620-659: PMI rate ~1.3% = $412/month
Lower credit scores mean higher PMI rates, which reduces how much house you can afford at the same income level.
Practical Takeaway
Start with the 28/36 rule as your baseline, subtract existing debts, and use our mortgage calculator to model your specific scenario. Input your income, debts, down payment, and local tax rate. The calculator shows your full PITI payment, PMI estimate, and tells you whether a given home price fits your budget. Run the numbers before you start browsing — knowing your real ceiling prevents heartbreak later.
Try it yourself
Run the numbers with our interactive calculator — drag a slider and watch the chart update instantly.
Open calculatorThis article is for educational purposes only and does not constitute financial advice. Consult a licensed financial advisor for decisions specific to your situation.