Updated March 2026 | how much house can I afford
The most widely used affordability guideline is the 28/36 rule:
28% Rule: Your monthly housing payment (mortgage + insurance + taxes + HOA) should not exceed 28% of your gross monthly income.
36% Rule: Your total monthly debt payments (housing + car + student loans + credit cards) should not exceed 36% of your gross monthly income.
Example: If your household income is $85,000/year ($7,083/month):
Max housing payment (28%): $1,983/month
Max total debt (36%): $2,550/month
With current rates at 6.45%, 20% down, and typical taxes/insurance, this household can afford approximately $320,000-$340,000 home.
Here is how much house you can afford at different income levels (assuming 6.45% rate, 20% down, average property taxes):
$50,000 income: $195,000-$215,000 home
$60,000 income: $235,000-$260,000 home
$75,000 income: $295,000-$325,000 home
$85,000 income: $335,000-$370,000 home
$100,000 income: $395,000-$435,000 home
$125,000 income: $495,000-$545,000 home
$150,000 income: $590,000-$650,000 home
$200,000 income: $785,000-$870,000 home
These ranges assume no other significant debt. If you have car payments or student loans, the affordable amount decreases. Use our home affordability calculator for your exact number.
The mortgage payment is just the beginning. Budget for these additional costs:
Property Taxes: Average 1.1% of home value nationally ($3,850/year on $350,000 home). Ranges from 0.29% in Hawaii to 2.23% in New Jersey.
Homeowners Insurance: $1,500-$3,000/year depending on location and coverage.
PMI (Private Mortgage Insurance): Required with less than 20% down. Typically 0.5-1.5% of loan amount per year ($1,400-$4,200 on $280,000 loan).
Maintenance: Budget 1-2% of home value per year ($3,500-$7,000 on $350,000 home).
HOA Fees: $200-$500/month if applicable.
Utilities: $200-$400/month for a typical single-family home.
Total: Add 30-50% on top of your mortgage payment for the true monthly cost.
1. Improve your credit score before applying (saves 0.5-1% on rate)
2. Consider FHA loans if you have less than 20% down
3. Look at up-and-coming neighborhoods
4. Consider a shorter commute in a less expensive area
5. Buy a fixer-upper and add value through renovations
6. House hack: buy a duplex, live in one unit, rent the other
7. Negotiate the purchase price (especially in a buyer market)
8. Ask the seller to pay closing costs
9. Use first-time buyer programs (down payment assistance, state programs)
10. Wait and save for a larger down payment to avoid PMI