How Much House Can I Afford? (2026 Calculator + Rules of Thumb)
The honest answer is "less than your bank will lend you." Banks pre-approve based on debt-to-income ratios that assume you can stomach max payments forever. Real life — kids, car repairs, a slow quarter at work — needs slack. This guide walks through the 28/36 rule, current 2026 rates, and how to use the free calculator to land on a payment you can keep paying when life gets weird.
Use the calculator
Mortgage Calculator
Step-by-step
- 1
Calculate your monthly gross income
Take your annual salary and divide by 12. If you have variable income (commission, freelance), use the 12-month average. Both spouses combined if buying together.
- 2
Apply the 28% rule
Your housing cost (principal + interest + taxes + insurance + HOA) should not exceed 28% of gross monthly income. On $100k/yr ($8,333/mo), that's $2,333/mo max housing.
- 3
Apply the 36% total debt rule
All debt payments combined (housing + cars + credit cards + student loans) should stay under 36% of gross. This is what lenders look at as the back-end ratio.
- 4
Plug into the mortgage calculator
Use our Mortgage Calculator with your max housing payment minus ~$300-600/mo for property tax + insurance. The remainder is your principal + interest budget.
- 5
Work backward to home price
At today's ~7% rates over 30 years, every $1,000/mo of P&I supports about $150,000 of loan. Add your down payment to get max home price.
💡 Tips
- A 20% down payment avoids PMI (private mortgage insurance) — typically 0.5-1.5% of the loan annually. Skip it if you can.
- Property taxes vary 5-10x between states. Add 1.2% of home value per year as a rough national average; check your county for actual numbers.
- Closing costs run 2-5% of the home price. Budget for them on top of the down payment.
- Lenders often approve more than the 28/36 rule allows. They will not stop you from buying too much house.
FAQ
Should I buy at the top of my approval?
No. Banks underwrite for ability to pay, not financial breathing room. Buying at 80-90% of approval gives you margin for repairs, raises that don't come, and life events.
What if I have student loans?
They count in the 36% back-end ratio. If your monthly student loan payment is $400 on $100k income, you have only $2,600/mo left for housing + other debts.
Are the rules different for first-time buyers?
Same math, but FHA loans allow as little as 3.5% down (with PMI) and slightly higher debt ratios. Use them if you need to, but the smaller payment from 20% down is hard to beat.