Published: June 2026 | Reading time: 4 minutes
"How much house can I afford?" is the first question every home buyer asks — and the answer depends on more than just your salary. Here's exactly how lenders calculate it, and a free tool to get your number instantly.
Most lenders follow the 28/36 rule:
| Annual Income | Max Monthly Payment (28%) | Est. Max Home Price* |
|---|---|---|
| $50,000 | $1,167 | ~$175,000 |
| $75,000 | $1,750 | ~$265,000 |
| $100,000 | $2,333 | ~$355,000 |
| $150,000 | $3,500 | ~$535,000 |
| $200,000 | $4,667 | ~$715,000 |
* Assumes 6.11% rate, 30-year term, 20% down, 1.5% property tax, $1,200/year insurance.
A 20% down payment eliminates PMI and lowers your monthly payment. But with 3% down conventional or 3.5% FHA, you can buy sooner — just expect to pay mortgage insurance.
In 2026, rates hover around 6–7%. A 1% rate difference on a $300,000 loan changes your monthly payment by ~$190. Shop at least 3 lenders.
Taxes vary dramatically: 0.5% in Alabama vs. 2.5% in New Jersey. A $400,000 home in a high-tax state costs $800/month more than the same home in a low-tax state.
Car loans, student loans, and credit card minimums eat into your DTI. Paying off a $400/month car loan frees up ~$65,000 in buying power.
A $500/month HOA reduces your maximum loan by ~$80,000. Always check HOA costs before making an offer.
Disclaimer: This article is for informational purposes. Actual loan approval depends on credit score, employment history, and lender-specific guidelines.