Home Affordability Calculator
How much house can you actually afford? Not the maximum your lender will approve — the number you can pay every month without crowding out retirement, savings, or your life. Uses the 28/36 rule and current Freddie Mac rates.
Last updated: April 2026 · Sources: Freddie Mac, HSH Q4 2025, Census ACS
US median: $83,730 (Census ACS)
Car loans, student loans, credit card minimums
US average ~1.10%. NJ 2.47%, Hawaii 0.30%.
The 28/36 rule, and why it matters more in 2026
The 28/36 rule has been the backbone of mortgage lending since the 1970s. It says your housing costs should be no more than 28% of your gross monthly income, and your total debt payments (housing plus everything else) should be no more than 36%. On a $120,000 salary, that means about $2,800 per month for everything housing-related: principal, interest, taxes, insurance, PMI if applicable, and HOA.
The rule has not changed but the math has gotten brutal. According to HSH's Q4 2025 data, you now need an annual income of $106,731 to comfortably afford the US median home of $414,900 — but the median household earns just $83,730(Census ACS). That gap is the entire affordability crisis in two numbers. The Atlanta Fed's Home Ownership Affordability Monitor reports that the median American household is actually spending 47.7% of income on housing — way above the 30% threshold the rule recommends.
The lesson: the rule is conservative by design, and it is still right. People who buy at 40%+ of income end up house-poor — unable to save for retirement, build an emergency fund, or handle a job loss. Pick a payment you can actually live with, then back into the home price. Do not let a lender's "maximum approval" become your target.
Income needed by city (Q4 2025 data)
From HSH and Visual Capitalist's Q4 2025 analysis. Numbers reflect the gross household income required to afford a median-priced home with 20% down at current rates, including PITI.
| Metro area | Income needed | vs national median ($83,730) |
|---|---|---|
| San Jose, CA | $458,504 | 5.5x |
| San Francisco, CA | $321,463 | 3.8x |
| San Diego, CA | $235,343 | 2.8x |
| Los Angeles, CA | $224,190 | 2.7x |
| New York, NY | $200,280 | 2.4x |
| Boston, MA | $190,858 | 2.3x |
| Seattle, WA | $188,000 | 2.2x |
| US national average | $106,731 | 1.3x |
| Cleveland, OH | $60,000 | 0.7x |
| Detroit, MI | $52,000 | 0.6x |
Four real affordability scenarios
1. The single $75K earner in the Midwest
Taylor earns $75,000/year, has $400/month in student loans, and $30,000 saved. The 28/36 rule gives her $1,750/month for housing. With 10% down ($21,000) on a $190,000 home in Cleveland, her PITI runs about $1,520/month — comfortably within the 28% rule. She can afford it. In San Jose at the same income, the same home does not exist.
2. The $150K couple stretching for the dream house
Kelly and Jesse earn $150,000 combined with $3,000 in monthly debt and $100,000 saved. The 28% rule says their housing budget is $3,500/month, supporting a roughly $475,000 home with 20% down. But their lender pre-approves them for $650,000. At that price their payment would be $4,800/month, eating 38% of gross income — and combined with their other debt, total DTI hits 62%. They buy the $475,000 house. Three years later they are still saving for retirement and not stressed about the next car repair.
3. The buyer who took the lender's max
Parker earns $100,000 with $1,500/month in debt payments. The 28/36 rule says comfortable housing is $2,333/month. His lender approves him at 50% DTI for a $450,000 home with a $3,667/month payment. He buys it. Combined with his existing debt, that is 62% of gross income on debt payments. Within a year he is putting groceries on credit cards and paid 401(k) contributions are zero. He is technically a homeowner; financially he is drowning.
4. The high earner in a high-cost city
Alex earns $250,000 in San Francisco and wants to buy a $1.2M starter home. With 20% down ($240,000), the loan is $960,000 at 6.46% — monthly P&I of $6,037. SF property tax of 0.71% adds $710, insurance $400, total PITI $7,147 — 34% of gross income. Above the 28% threshold, but not catastrophic for someone who otherwise has no debt and high savings. Welcome to the Bay Area, where the affordable choice is keep renting.
Common mistakes when calculating affordability
1. Using gross income instead of take-home
The 28/36 rule uses gross. But your actual take-home after taxes, 401(k), and health insurance is closer to 65-75% of gross. A "28% of gross" payment can still feel like 40% of what actually lands in your bank account.
2. Forgetting future expenses
Buy for your life in 5 years, not just today. Kids, daycare, one income going part-time, aging parents, a job change — all of it eats into the housing budget. A payment that fits today may crush you in 3 years.
3. Ignoring maintenance reserves
Hippo Insurance recommends 1-3% of home value annually for maintenance. The mortgage calculator does not show this, but your bank account will.
4. Treating the lender's max as the target
A pre-approval is the maximum you CAN borrow, not the amount you should. The lender does not know what your life costs.
5. Counting unstable income as base
Bonuses, commissions, and freelance work should not be in your base affordability calculation. Use only reliable W-2 base salary or stable self-employment income from the last 2 years of tax returns.
Frequently asked questions
How much house can I afford on my income in 2026?
Use the 28/36 rule: housing costs (PITI plus HOA) should not exceed 28% of your gross monthly income, and total debt payments should not exceed 36%. According to HSH Q4 2025 data, you need an annual income of about $106,731 to comfortably afford the median US home of $414,900 at current rates. The US median household income is $83,730 — meaning the typical American household actually cannot afford the typical American home right now.
What is the 28/36 rule and where does it come from?
The 28/36 rule is a debt-to-income guideline used by lenders since the 1970s. The 28% caps your monthly housing costs (principal, interest, taxes, insurance, HOA) at 28% of your gross monthly income. The 36% caps total debt (housing plus car loans, student loans, credit cards, child support) at 36% of gross income. It is conservative by design — most lenders will approve you for more, but the rule reflects what people can actually afford long term without financial stress.
Will lenders approve me for more than the 28/36 rule says?
Yes, often much more. Conventional loans can stretch to 43% DTI in many cases, FHA loans up to 50% with strong compensating factors. The Atlanta Fed Home Ownership Affordability Monitor reports the median American household actually spends 47.7% of income on housing — well above the recommended 30% threshold, which is why so many families feel financially stretched. Just because a lender will approve you does not mean you should borrow that much.
How much income do I need to afford a $400,000 home?
At current rates with 20% down, $400,000 home, 1.10% property tax, and standard insurance, the monthly PITI is roughly $2,790. To stay within the 28% rule, you need a gross monthly income of $9,964 — about $119,500 per year. With less than 20% down (adding PMI), the income required jumps to about $130,000.
What is the income needed for a median-priced home in major cities?
According to HSH and Visual Capitalist Q4 2025 data: San Jose requires $458,504, San Francisco $321,463, San Diego $235,343, Los Angeles $224,190, New York City $200,280, Boston $190,858. At the affordable end: Detroit needs only about $52,000, and several Ohio metros (Akron, Dayton, Cleveland) come in around $60,000. The national average sits at $106,731.
Should I buy as much house as the lender approves?
No. The lender knows your income and debts but not your spending. They do not know about your gym membership, the money you send to family, your travel habits, or the daycare costs that start in 6 months. The safer move is to figure out what monthly payment you are comfortable with first, then ask the lender to pre-approve you for that exact amount. A pre-approval is the maximum you CAN borrow, not the amount you should.
Does my down payment affect how much house I can afford?
Yes, in two ways. A larger down payment reduces the loan amount and lowers your monthly payment, which lets you afford a more expensive home at the same monthly cost. It also eliminates PMI at 20% down, which can save $150-$300 per month. On the other hand, putting all your savings into the down payment can leave you cash-poor at exactly the time you need reserves for closing costs and moving.
How much should I put down on a house?
Conventional loans require as little as 3% down for first-time buyers, FHA loans require 3.5%, and VA/USDA loans can require zero. But the math favors larger down payments. Going from 5% to 20% down on a $400,000 home eliminates PMI (saving roughly $200/month) and lowers your loan amount. The sweet spot for most buyers is somewhere between 10% and 20% — enough to keep PMI low or avoid it, while preserving emergency reserves.
What other costs should I budget for besides the mortgage payment?
A 2025 Bankrate study found the typical homeowner spends about $21,000 a year on "hidden" costs of homeownership including maintenance, insurance, taxes, and utilities. Hippo Insurance recommends setting aside 1-3% of home value annually for repairs alone. On a $400,000 home that is $4,000-$12,000 per year. None of this shows up in a mortgage calculator, but it should show up in your budget before you make an offer.
Is it cheaper to rent or buy in 2026?
It depends entirely on the city. In high-cost coastal markets where home prices have run up faster than rents, renting is often cheaper for shorter holds. In Midwest and Sun Belt cities where rents have risen faster than prices, buying often wins after 5+ years. The break-even point — where buying beats renting — has stretched to 7-10 years in many markets due to elevated mortgage rates and home prices. Use a rent vs buy calculator with your specific local numbers.
What credit score do I need to buy a house?
Conventional loans typically require 620, FHA loans 580 (with 3.5% down) or 500 (with 10% down), VA loans usually 580-620 depending on the lender. The best mortgage rates go to scores of 760+. The difference between a 680 and 760 score on a $300,000 loan is roughly 0.5% on the rate, which is about $35,000 in extra interest over 30 years. Worth taking 3-6 months to fix your credit before applying.
How long should I plan to stay in a home for buying to make sense?
The standard rule of thumb is 5 years minimum to break even on closing costs and selling costs. In high-cost markets with elevated rates, 7-10 years is more realistic. If you might move within 3 years, renting is almost always better financially. If you are confident you will stay 7+ years, buying typically wins on total cost of housing, especially when you factor in equity build-up and mortgage interest deduction.
Data sources: Freddie Mac PMMS April 2 2026; HSH Q4 2025 home affordability analysis; US Census Bureau American Community Survey 5-year estimates; Atlanta Fed Home Ownership Affordability Monitor; Visual Capitalist 2026 city income map; Bankrate 2025 hidden costs of homeownership study.
Last updated: April 2026. Home prices and affordability data are reported quarterly. Personal affordability depends on factors not captured here.
Disclaimer: This calculator provides estimates for educational purposes only and is not financial advice. Talk to a qualified financial advisor and a licensed mortgage professional before buying a home.