How Much House Can I Afford?
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See all calculators →The most common question new homebuyers ask: how much house can I actually afford? The answer depends on income, debt, down payment, and prevailing mortgage rates — but the framework lenders use is consistent. Here is the math.
The 28/36 rule explained
Most lenders use the 28/36 rule to qualify mortgages:
- 28% rule (front-end): Your monthly housing cost (PITI: principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income.
- 36% rule (back-end): Your total monthly debt payments (PITI + car loans + student loans + minimum credit card payments) should not exceed 36% of gross monthly income.
FHA loans are slightly more flexible (31/43); conventional loans typically use 28/36. Some lenders go higher for borrowers with strong credit.
Affordability by income (typical 2026 rates)
| Annual income | Max mortgage payment (28% rule) | Max home price (10% down, 7% rate, 30yr) |
|---|---|---|
| $50,000 | $1,167/mo | ~$200,000 |
| $75,000 | $1,750/mo | ~$300,000 |
| $100,000 | $2,333/mo | ~$400,000 |
| $150,000 | $3,500/mo | ~$600,000 |
| $200,000 | $4,667/mo | ~$800,000 |
| $300,000 | $7,000/mo | ~$1,200,000 |
These are MAXIMUMS lenders may approve. The amount you SHOULD spend is often 20-30% lower to leave room for emergencies, retirement saving, and lifestyle.
What lenders actually look at
- Gross monthly income (pre-tax)
- Down payment (10-20% typical conventional; 3.5% FHA; 0% VA)
- Credit score (740+ best rates; 620+ minimum for conventional; 580+ minimum for FHA)
- Debt-to-income ratio (DTI; back-end ratio)
- Cash reserves (lenders want to see 3-6 months of payments in savings)
- Employment history (2 years stable employment preferred)
Hidden costs that drop affordability
- Property tax: 0.5-2.5% of home value annually depending on state. New Jersey 2.49%, Hawaii 0.27% (highest and lowest in 2024)
- Homeowners insurance: $1,200-$3,000/yr typical; higher in disaster-prone areas
- PMI (private mortgage insurance): required if down payment under 20% on conventional; typically 0.5-1.5% of loan annually
- HOA fees: $200-$500/mo typical for condos and managed communities
- Maintenance: budget 1-2% of home value annually for repairs
- Closing costs: 2-5% of home price upfront
Should you spend the maximum?
Probably not. The 28/36 rule is the LENDER's comfort threshold, not yours. Common reasons to spend less:
- Maxing out housing payment leaves no room for retirement saving (you should aim for 15% of income to retirement)
- Higher payment increases stress; a lower payment provides options if income drops
- Maintenance on a $400K home is meaningfully more expensive than on a $250K home
- Larger homes have higher utility bills, taxes, and insurance — costs scale
Many financial advisors recommend keeping housing under 25% of gross income (vs 28% lender max).
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Browse calculators →Frequently Asked Questions
- What is a good DTI ratio for a mortgage?
- Lenders prefer 36% or lower (back-end DTI). FHA allows up to 43%; some non-QM loans allow 50%. Lower is always better.
- How much do I need for a down payment?
- Conventional minimum is typically 3-5%; FHA is 3.5%; VA loans are 0% for qualifying veterans. Putting 20% down avoids PMI and gets the best rates.
- Can I afford a house if I make $60K?
- At $60K gross income, the 28% rule allows ~$1,400/mo housing payment, which equates to ~$240,000 home with 10% down at 7% rate. Lower price if you have other significant debts.
- Should I get pre-approved before house shopping?
- Yes — pre-approval shows sellers you're a serious buyer, locks in rates, and gives you a concrete budget. Pre-qualification is weaker (just an estimate based on stated income).
- How does interest rate affect affordability?
- Massively. A $300K mortgage at 5% costs $1,610/mo P&I; at 7% costs $1,996/mo. The 2% rate increase reduces affordability by 19%.
Educational only — not legal, financial, or tax advice. Tax law and rates change frequently. Consult a CPA or financial advisor for your specific situation.