How Much House Can I Afford? A Complete 2026 Guide

The short answer

Most lenders use the 28/36 rule: spend no more than 28% of your gross monthly income on housing, and no more than 36% on total debt. If you earn $90,000 a year ($7,500/month), that caps housing at about $2,100 and total debt at $2,700 per month.

But the rule is a starting point, not a verdict. Your real budget depends on your down payment, interest rate, existing debts, and how much cushion you want for emergencies.

What lenders actually evaluate

• Debt-to-income ratio (DTI): total monthly debt ÷ gross monthly income. Under 36% is comfortable; many loans allow up to 43–50%.
• Down payment: 20% avoids private mortgage insurance (PMI), but many buyers put down 3–10%.
• Credit score: a higher score earns a lower rate, which directly increases how much you can borrow.
• Cash reserves: lenders like to see a few months of payments in savings after closing.

How to calculate your number

Start with your maximum monthly housing payment (28% of gross income). Subtract estimated property tax and insurance — roughly 20% of the payment. What remains is your principal-and-interest budget, which you can convert to a loan amount at current rates. Add your down payment, and that is your target home price.

Our Home Affordability Calculator does this math instantly, including your existing debts and DTI limit.

A worked example

Say you earn $90,000/year, have $500/month in other debt, $40,000 saved for a down payment, and rates are 7%. With a 36% DTI limit, your total debt budget is $2,700/month. After the $500 in other debt, $2,200 is left for housing. Reserving ~20% for tax and insurance leaves about $1,760 for principal and interest — roughly a $265,000 loan, or a ~$305,000 home with your down payment.

Bottom line

Affordability is about cash flow and comfort, not just the maximum a bank will lend. Run your own numbers, leave room for emergencies, and remember that a smaller, comfortable payment beats a stretch budget that leaves you house-poor.