It's the first real question every home buyer asks: how much house can I actually afford? The listings all look tempting, a lender might approve you for more than you expect, and it's dangerously easy to stretch too far. The honest answer isn't a single number — it's a formula based on your income, your debts, and today's rates. Here's how to work it out for 2026, in plain English.
The short answer
As a rule of thumb, most buyers can comfortably afford a home priced at roughly three to four times their annual gross income, assuming a solid down payment and manageable existing debt. So on a $90,000 household income, that's very roughly a $270,000–$360,000 home — higher with a big down payment, lower if you're carrying car loans or student debt.
But that's just a starting sketch. The number lenders actually use is the 28/36 rule, and it's worth understanding because it's what decides your approval.
The 28/36 rule
Lenders judge affordability with two simple percentages:
- The 28% front-end ratio: your total monthly housing payment shouldn't exceed 28% of your gross monthly income. "Housing payment" means everything — principal, interest, property tax, home insurance, PMI, and any HOA fees.
- The 36% back-end ratio: all of your monthly debt — housing plus car payments, student loans, and minimum credit-card payments — shouldn't exceed 36% of gross monthly income.
An example makes it click. Say you earn $7,500 a month before tax:
- 28% of $7,500 = $2,100 — your target maximum housing payment.
- 36% of $7,500 = $2,700 — your ceiling for all debts combined. If you already pay $500 on a car loan, that leaves $2,200 for housing.
Some lenders stretch these limits — conventional loans sometimes allow a debt-to-income ratio of 43–50% with strong credit and cash reserves. But just because you can borrow more doesn't mean you should. The 28/36 rule keeps you comfortable, not house-poor.
It's not just the mortgage payment
The single biggest mistake buyers make is budgeting for principal and interest alone. Your real monthly cost usually includes four or five pieces:
- Principal & interest — the loan itself.
- Property tax — often around 1% of the home's value per year, but it varies a lot by state.
- Home insurance — commonly $1,500–$2,500 a year.
- PMI (private mortgage insurance) — if your down payment is under 20%, expect roughly $75–$200+ a month until you build enough equity.
- HOA fees — for condos and many newer neighborhoods, from modest to a few hundred dollars a month.
Add them up and the "affordable" payment can be several hundred dollars more than the loan payment alone. That's exactly why our Mortgage Calculator folds all of these — tax, insurance, PMI, and HOA — into one realistic monthly number, instead of the flattering principal-and-interest figure many calculators show.
What 2026 rates mean for your budget
Interest rates move your budget more than almost anything else. As of 2026, the average 30-year fixed mortgage rate is around 6.8%, with 15-year loans nearer 6.1%. At those levels, every point of rate matters:
On a $350,000 loan, the gap between 6% and 7% is roughly $230 a month — about $2,800 a year, and well over $80,000 across a 30-year loan.
That's why it pays to shop multiple lenders and, if you can, improve your credit score before applying — a better rate raises the home you can afford without raising your payment. When rates are higher, a 15-year loan or a larger down payment can also pull the monthly cost back into range.
Down payment: how much you really need
The old "you must have 20% down" advice isn't strictly true anymore — though 20% still carries a real benefit:
- 20% down — no PMI, a better rate, and a lower payment. The gold standard if you can reach it.
- 5–10% down — common for conventional loans, but you'll pay PMI until you hit about 20% equity.
- 3.5% down — FHA loans allow this with a credit score around 580+.
- 0% down — VA loans, for eligible veterans and service members.
With the median US home price hovering around $410,000–$415,000 in 2026, a full 20% is over $80,000 — out of reach for many first-time buyers, which is exactly why lower-down-payment loans (with PMI) are so common. Saving that down payment is often the real hurdle; a compound interest calculator can show how a steady monthly savings plan grows toward it.
How to find your exact number
Here's a clean, five-minute process:
- Start with your take-home reality. Know your actual monthly income — our Paycheck Calculator shows what really lands after taxes, which grounds the whole exercise. (For the bigger picture on salaries, see how much $70,000 is after taxes.)
- Apply the 28/36 rule to your gross income to find your target housing payment and your total-debt ceiling.
- Work backward to a home price with the Mortgage Calculator — plug in a price, your down payment, and today's rate, then adjust the price until the all-in monthly payment lands at or below your 28% target.
- Leave a cushion. Don't max out the number — leave room for maintenance, emergencies, and life. A payment you can make easily beats one that keeps you up at night.
Affordability in 2026 is tighter than it was a few years ago, but knowing your real number — not the bank's maximum — puts you in control. Run the figures for yourself before you fall for a listing.
Frequently asked questions
Using the 28% rule, about $2,333 a month for total housing (28% of roughly $8,333 gross monthly). Depending on your down payment, rate, and other debts, that typically supports a home in the ~$300,000–$400,000 range in 2026. Run your exact figures in a mortgage calculator.
It's the standard lender guideline: your housing payment should stay under 28% of gross monthly income (the front-end ratio), and all your debts combined under 36% (the back-end ratio). It's the simplest way to gauge what you can comfortably afford.
No — FHA loans allow 3.5% down and VA loans 0% for those eligible. But with under 20% down you'll pay PMI until you build about 20% equity. Putting 20% down avoids PMI and usually earns a better interest rate.
At a 2026 rate around 6.8% with 20% down on a 30-year loan, principal and interest run about $2,075 a month — roughly $2,600 once property tax and insurance are added. Use a mortgage calculator to match your exact price, rate, and down payment.