How Much House Can You Afford in 2026?
Affordability is the gap between what a lender will approve you for and what you can actually live with. Most buyers stretch to the lender's maximum and end up house-poor — locked into a payment that leaves no room for savings, repairs, or rate increases on adjustable loans. A real affordability number factors total monthly debt, property taxes, insurance, HOA, and the lifestyle you want to keep.
The 28/36 Rule (And When To Ignore It)
The classic guideline: spend no more than 28% of gross monthly income on housing (PITI) and no more than 36% on total debt including the mortgage. With $10,000/mo gross income, that's $2,800/mo max housing payment and $3,600/mo max total debt.
- 28% × $10,000 = $2,800 housing payment ceiling
- 36% × $10,000 = $3,600 total debt ceiling
- $3,600 − $650 existing debts = $2,950 available for housing (lower of two)
- Many buyers in high-cost coastal markets stretch to 35-40% housing — workable only if other debt is zero and emergency fund is full
What Down Payment Actually Buys You
Your down payment changes both the loan amount and whether PMI applies. PMI adds 0.3-1.5% of the loan annually until you hit 20% equity:
- 3% down ($12K on $400K): smallest cash outlay, $9-15K in lifetime PMI before it drops
- 10% down ($40K): cuts PMI cost in half, faster equity growth
- 20% down ($80K): no PMI, lowest possible monthly payment, strongest offer in competitive markets
- 20%+ down: extra dollars beyond 20% lower payments but lose liquidity — usually not worth it if you'll need cash for renovations
Hidden Costs That Eat Affordability
Lenders qualify you on PITI but real homeownership costs more. Budget for:
- Maintenance reserve: 1-2% of home value per year ($4-8K on a $400K house)
- Property taxes: 0.8-2.5% annually depending on state — California's 1% is gentle, New Jersey's 2.4% punishing
- Homeowners insurance: $1,500-3,500/year, much more in coastal/wildfire zones
- HOA dues if applicable: $100-800/month
- Utilities: typically 30-50% higher than equivalent rental
- First-year furnishing/repair budget: $5-15K
Our affordability calculator runs the 28/36 rule, factors PITI plus PMI, lets you set a custom debt-to-income target, and shows what shifts in down payment, rate, or income do to your max price. Get a buyer-ready number in under a minute. Use our free affordability calculator before you talk to a lender.
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Mortgage Calculator, Buyer Closing Costs Calculator, Home Value Estimator, Rent vs Buy Calculator.