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.
Disclaimer. This guide is for general educational and informational purposes only and is not financial, tax, or legal advice. Calculator results are estimates based on the figures and assumptions you enter; rates and tax rules change and vary by situation. Consult a licensed professional before making financial decisions. Read our editorial policy.