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How Much House Can I Afford? Complete Guide for 2026

Buying a home is one of the biggest financial decisions you'll make. But how do you know how much house you can actually afford? This guide breaks it down simply.

The 28/36 Rule: Your Starting Point

Lenders use the 28/36 rule to determine what you can afford:

• 28% of your gross monthly income should go to housing costs
• 36% of your gross monthly income should go to all debt combined (housing + car + student loans + credit cards)

How to Calculate Your Maximum Home Price

Step 1: Calculate your gross monthly income (before taxes)

Step 2: Multiply by 0.28

Example: If you earn $100,000/year ($8,333/month):

• $8,333 × 0.28 = $2,333/month maximum for housing

This $2,333/month includes your mortgage principal, interest, property taxes, insurance, and HOA fees.

What Affects How Much House You Can Afford?

• Down payment size - More down = smaller mortgage
• Interest rate - Lower rates mean you can afford more
• Debt-to-income ratio - Less existing debt = more house
• Credit score - Higher score = better rates

Example: $100K Salary

If you earn $100,000/year ($8,333/month) with no other debt:

• Maximum monthly payment: $2,333
• At 6.5% rate with 20% down, you could afford approximately $350,000-$400,000

Don't Forget These Costs

• Property taxes - Typically 1-2% of home value per year
• Homeowners insurance - $1,000-$2,000/year average
• HOA fees - $200-$500/month in many communities
• Maintenance - Budget 1% of home value annually

Bottom Line

The simple answer: multiply your gross monthly income by 0.28 to find your maximum housing payment. But remember to leave room for other debts and future expenses.