How Much House Can I Afford? A Complete Guide for 2026
Learn exactly how much house you can afford based on your income, debt, and down payment. Includes the 28/36 rule, real salary-based examples, and a breakdown of hidden costs most buyers miss.
The question every buyer asks
"How much house can I afford?" is one of the most searched questions in real estate - and one of the most poorly answered. Most online calculators give you a number based on your gross income and nothing else. That's dangerous. The real answer depends on your take-home pay, existing debt, down payment, local taxes, insurance, and how much financial breathing room you want.
This guide breaks down the math that actually matters.
The 28/36 rule: your starting point
Most lenders use the 28/36 rule to determine how much they'll lend you:
- 28% rule: Your monthly housing payment (mortgage + taxes + insurance + HOA) should not exceed 28% of your gross monthly income.
- 36% rule: Your total monthly debt payments (housing + car payments + student loans + credit cards) should not exceed 36% of your gross monthly income.
Here's what that looks like at different income levels:
| Annual Salary | Monthly Gross | Max Housing (28%) | Max Total Debt (36%) |
|---|---|---|---|
| $60,000 | $5,000 | $1,400 | $1,800 |
| $80,000 | $6,667 | $1,867 | $2,400 |
| $100,000 | $8,333 | $2,333 | $3,000 |
| $120,000 | $10,000 | $2,800 | $3,600 |
| $150,000 | $12,500 | $3,500 | $4,500 |
What the 28/36 rule misses
The 28/36 rule tells you what a lender will approve - not what you can comfortably afford. Here's what it doesn't account for:
Property taxes vary wildly by state. A $400,000 home in Texas costs roughly $8,000-$10,000/year in property taxes (2-2.5%). The same home in Colorado costs about $2,400/year (0.6%). That's a $500/month difference that the 28/36 rule lumps into "housing costs" without explaining.
Maintenance costs are real. Budget 1% of the home's value per year for maintenance. On a $400,000 home, that's $4,000/year or $333/month. New buyers consistently underestimate this.
Homeowner's insurance is rising fast. Average annual premiums have increased 20%+ since 2023. In Florida, average premiums now exceed $4,000/year. Factor this into your monthly budget.
Real examples: salary to home price
Let's work through what you can actually afford at two salary levels, assuming a 6.75% mortgage rate, 30-year term, and 20% down payment.
Example 1: $80,000 salary
- Monthly gross income: $6,667
- Max housing payment (28%): $1,867/month
- Estimated property tax: $350/month (national average)
- Estimated insurance: $150/month
- Available for mortgage P&I: $1,367/month
- Maximum home price: ~$275,000
Example 2: $120,000 salary
- Monthly gross income: $10,000
- Max housing payment (28%): $2,800/month
- Estimated property tax: $500/month
- Estimated insurance: $175/month
- Available for mortgage P&I: $2,125/month
- Maximum home price: ~$425,000
Use our free mortgage calculator to run your own numbers with exact tax and insurance figures for your area.
The down payment question
The size of your down payment dramatically affects what you can afford:
| Home Price | 5% Down | 10% Down | 20% Down |
|---|---|---|---|
| $300,000 | $15,000 | $30,000 | $60,000 |
| $400,000 | $20,000 | $40,000 | $80,000 |
| $500,000 | $25,000 | $50,000 | $100,000 |
Should you buy or keep renting?
Not everyone should buy. If you're planning to move within 3-5 years, renting is almost always cheaper after accounting for closing costs (3-6% of the purchase price), selling costs (5-6% realtor fees), and the opportunity cost of your down payment.
Use our rent vs. buy calculator to compare the total cost of each option over your specific time horizon.
The bottom line
The house you can afford and the house a lender will approve you for are two different numbers. Start with the 28/36 rule, subtract property taxes and insurance, then honestly assess your comfort level. A good rule of thumb: if the mortgage payment makes you nervous, the house is too expensive.
Run your exact numbers with our mortgage calculator - it shows the full amortization schedule and how extra payments can save you thousands in interest.
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