How Much House Can You Afford?
Last reviewed: May 2026
A home affordability calculator determines the maximum home price you can reasonably purchase based on your income, debts, down payment, interest rate, and local costs like property tax and insurance. Banks will often approve you for more than you can comfortably afford — this calculator shows you what you can actually sustain without becoming house-poor. The difference between "approved for" and "comfortable with" can be $100,000 or more.1
Lenders use two key ratios. The front-end ratio (28%): your total housing payment (mortgage + taxes + insurance + HOA) should not exceed 28% of gross monthly income. The back-end ratio (36%): all monthly debt payments combined should stay below 36%. On a $100,000 household income, that means housing costs under $2,333/month and total debt under $3,000/month. FHA allows up to 31/43%, and VA has no hard front-end limit.2
| Household Income | Max Housing (28%) | Max All Debt (36%) | Approx. Home Price* |
|---|---|---|---|
| $60,000 | $1,400/mo | $1,800/mo | $210K–$250K |
| $80,000 | $1,867/mo | $2,400/mo | $280K–$330K |
| $100,000 | $2,333/mo | $3,000/mo | $350K–$420K |
| $125,000 | $2,917/mo | $3,750/mo | $440K–$520K |
| $150,000 | $3,500/mo | $4,500/mo | $530K–$630K |
*Approximate ranges assume 20% down, 7% rate, 30-year fixed. Actual varies by taxes, insurance, and existing debt.
Your mortgage payment is only the beginning. Budget for property taxes (0.5–2.5% of home value annually), homeowner's insurance ($1,200–$3,000/year), HOA fees if applicable ($200–$800/month), and maintenance/repairs (budget 1–2% of home value annually). A $400,000 home with a $2,395 P&I payment may actually cost $3,200–$3,800/month all-in. PMI adds another $150–$450/month if your down payment is under 20%.3
A larger down payment reduces your loan amount, monthly payment, and total interest — and eliminates PMI at 20%. But depleting all savings for a bigger down payment is risky. Keep 3–6 months of expenses in reserve after closing, plus $5,000–$10,000 for immediate move-in costs and repairs. Use our Down Payment Calculator and Closing Cost Calculator to model the full upfront cost.4
The most widely used affordability guideline is the 28/36 rule: your monthly housing costs should not exceed 28% of gross monthly income (the front-end ratio), and your total debt payments should not exceed 36% of gross income (the back-end ratio). On a $100,000 household income, the 28% limit sets maximum housing costs at $2,333 per month — covering mortgage principal, interest, property taxes, homeowners insurance, and HOA fees. The 36% back-end ratio means total debt (housing plus car payments, student loans, credit cards, and other obligations) should stay under $3,000 per month. FHA loans allow ratios up to 31/43, and some conventional loans approve up to 50% back-end DTI for borrowers with strong compensating factors (high credit scores, substantial reserves, or large down payments). However, qualifying for a larger mortgage does not mean you can comfortably afford it — the 28/36 rule provides breathing room for unexpected expenses, savings, and quality of life that stretching to maximum qualification does not.
| Cost Component | $300K Home | $500K Home | $750K Home | Notes |
|---|---|---|---|---|
| Mortgage (P&I, 6.5%, 30yr, 20% down) | $1,516 | $2,528 | $3,792 | 80% LTV |
| Property tax (1.2%) | $300 | $500 | $750 | Varies widely by location |
| Insurance | $150 | $225 | $325 | Higher in disaster-prone areas |
| Maintenance (1%/yr) | $250 | $417 | $625 | Often underestimated |
| PMI (if < 20% down) | $0–$150 | $0–$250 | $0–$375 | Removed at 80% LTV |
| Total monthly | $2,216–$2,366 | $3,670–$3,920 | $5,492–$5,867 | Before utilities |
The traditional 20% down payment eliminates private mortgage insurance (PMI) and reduces the loan amount, resulting in lower monthly payments. However, saving 20% of current home prices — $60,000 on a $300,000 home, $100,000 on a $500,000 home — takes years for most buyers and delays homeownership during a period of potential price appreciation. Lower down payment options exist: FHA loans require 3.5% down ($10,500 on $300,000), conventional loans allow 3% to 5% ($9,000 to $15,000), and VA loans offer 0% down for eligible veterans. The trade-off is higher monthly costs from larger loan amounts and PMI, which typically adds 0.5% to 1.5% of the loan amount annually. PMI on a $285,000 loan (5% down on $300,000) costs approximately $120 to $360 per month. This PMI cost must be weighed against the opportunity cost of tying up additional capital in a down payment versus investing it elsewhere. Use our Down Payment Calculator for detailed scenarios.
The same household income affords dramatically different homes across different markets. A family earning $120,000 can comfortably afford a $400,000 home under the 28/36 rule. In many Midwest and Southern markets (Indianapolis, Dallas, Nashville, Atlanta), $400,000 buys a spacious single-family home in a good school district. In coastal metros (San Francisco, New York, Boston, Seattle), $400,000 may only purchase a studio or small condominium. Property taxes compound the disparity: a $400,000 home in New Jersey ($8,920/year property tax) costs $500 per month more than the same-value home in Colorado ($2,040/year). State income tax further affects take-home pay and effective affordability — a $120,000 income yields $8,000 to $12,000 more annually in states without income tax (Texas, Florida, Tennessee, Washington) compared to high-tax states (California, New York, New Jersey). For complete cost comparison between locations, see our Cost of Living Calculator.
| Home Price | Down Payment (20%) | Monthly Payment (6.5%) | Income Needed (28% rule) |
|---|---|---|---|
| $250,000 | $50,000 | $1,896 | $81,000 |
| $350,000 | $70,000 | $2,587 | $111,000 |
| $500,000 | $100,000 | $3,622 | $155,000 |
| $750,000 | $150,000 | $5,367 | $230,000 |
| $1,000,000 | $200,000 | $7,112 | $305,000 |
These figures include estimated property tax and insurance. Actual income requirements vary by location, down payment amount, interest rate, and other debt obligations. Use our Income Needed Calculator for customized estimates based on your specific financial situation and the Mortgage Calculator for detailed payment breakdowns.
Beyond the mortgage payment, homeownership carries numerous costs that renters do not face. Maintenance and repairs average 1% to 2% of the home's value annually — $5,000 to $10,000 per year for a $500,000 home. Major systems have finite lifespans: roofs last 20 to 30 years ($8,000 to $15,000 to replace), HVAC systems last 15 to 20 years ($5,000 to $12,000), water heaters last 10 to 15 years ($1,000 to $3,000), and appliances last 10 to 20 years ($500 to $3,000 each). A home warranty can cover some of these costs ($500 to $800 annually) but typically has service call fees and coverage limitations. HOA fees in condominiums and planned communities add $200 to $800 per month, covering exterior maintenance, amenities, and reserve funds. Utility costs for homeowners typically exceed renter costs due to larger spaces — budgeting $200 to $500 per month for electricity, gas, water, sewer, and trash is reasonable depending on location and home size.
Pre-qualification is an informal estimate of borrowing capacity based on self-reported financial information — it requires no document verification and carries little weight with sellers. Pre-approval is a formal process: the lender verifies income (pay stubs, W-2s, tax returns), assets (bank statements), credit score, and employment history, then issues a conditional commitment to lend a specific amount. In competitive markets, sellers strongly prefer offers from pre-approved buyers because the financing risk is substantially lower. Pre-approval letters are typically valid for 60 to 90 days and specify the maximum loan amount, loan type, and interest rate range. Getting pre-approved before house hunting prevents the disappointment of falling in love with a home you cannot afford and positions you to move quickly when you find the right property. The process typically takes 1 to 3 business days and involves a hard credit inquiry that temporarily reduces your score by 5 to 10 points.
The rent-versus-buy decision depends on dozens of variables: home prices, rental rates, investment returns, tax benefits, transaction costs, maintenance expenses, opportunity cost of the down payment, and expected time in the home. As a rough guideline, buying tends to make financial sense when you plan to stay at least 5 to 7 years — this is the typical breakeven period for recovering transaction costs (3% to 6% in realtor commissions plus 2% to 5% in closing costs). In high-cost markets where the price-to-rent ratio exceeds 20, renting and investing the savings can produce better financial outcomes than buying. In markets where the ratio is below 15, buying is usually the better financial choice. The tax benefits of homeownership — mortgage interest deduction and property tax deduction — have diminished since the 2017 tax reform, as the higher standard deduction means fewer homeowners itemize. For a personalized comparison, use our Rent vs Buy Calculator.
Financial advisors recommend that homeowners maintain an emergency fund covering 6 to 12 months of total housing costs — significantly larger than the 3 to 6 months recommended for renters. A renter who loses income can break a lease and downsize relatively quickly; a homeowner faces mortgage obligations, property taxes, insurance, and maintenance regardless of income disruption. For a home with $3,500 in monthly costs, a 6-month emergency fund requires $21,000 — separate from any remaining down payment savings. This reserve should be liquid (high-yield savings account or money market fund) and should not be invested in volatile assets that might lose value precisely when the funds are needed. For establishing savings targets, see our Emergency Fund Calculator.
→ Use take-home pay, not gross, for your personal budget. The 28% rule uses gross income because lenders do. But for your personal comfort, target 25% of take-home pay.
→ Pay off high-payment debts before house hunting. Eliminating a $400/month car loan can increase your buying power by $50K+.
→ Don't drain savings for the down payment. Keep 3–6 months of expenses in reserve plus $5K–$10K for move-in costs and immediate repairs.
→ Factor in all costs, not just the mortgage. Taxes, insurance, HOA, and maintenance can add $800–$1,500/month beyond your P&I payment.
See also: Mortgage Calculator · Down Payment · Closing Costs · Rent vs Buy · DTI Calculator