How Much House Can I Afford? Mortgage Calculator Guide for 2026

Buying a home is the biggest financial decision most people make, and the first question is always the same: how much house can I actually afford? The answer depends on your income, existing debts, down payment, credit score, and current interest rates. This guide walks you through each factor so you can set a realistic budget before you start shopping.

The 28/36 Rule: Your Starting Point

Lenders use the 28/36 rule as a guideline for mortgage approval:

• 28% rule (front-end ratio): Your monthly housing costs (mortgage payment + property taxes + insurance + HOA) should not exceed 28% of your gross monthly income.
• 36% rule (back-end ratio): Your total monthly debt payments (housing + car loans + student loans + credit cards + child support) should not exceed 36% of gross monthly income.

A Real Example

Let's say your household income is $90,000/year ($7,500/month gross):

Metric	Calculation	Amount
Max housing payment (28%)	$7,500 x 0.28	$2,100/month
Max total debt (36%)	$7,500 x 0.36	$2,700/month
Existing debts (car + student)	—	$500/month
Available for housing	$2,700 - $500	$2,200/month

With $2,100-2,200/month available for housing, at a 6.5% rate with 10% down, you could afford approximately a $320,000-340,000 home. Use our free mortgage calculator to run your exact numbers.

Factors That Affect Your Budget

Down Payment

A larger down payment means a smaller loan, lower monthly payments, and often a better interest rate. Putting down 20% eliminates the need for private mortgage insurance (PMI), which typically costs 0.5-1% of the loan amount annually. On a $300,000 loan, that is $1,500-3,000/year in PMI you could avoid.

Interest Rates

Even a small rate difference has an enormous impact over 30 years. On a $300,000 mortgage:

• At 5.5%: $1,703/month — $313,212 total interest
• At 6.5%: $1,896/month — $382,633 total interest
• At 7.5%: $2,098/month — $455,168 total interest

That 2% rate difference means $142,000 more in interest over the life of the loan.

Credit Score Impact

Your credit score directly affects the interest rate you qualify for. A score of 740+ typically qualifies for the best rates. Scores below 620 may require FHA loans with higher rates and mandatory mortgage insurance. Improving your credit score by even 40 points before applying can save tens of thousands over the life of the mortgage.

Hidden Costs New Buyers Miss

• Property taxes: Average 1-2% of home value annually. On a $350,000 home, that is $3,500-7,000/year.
• Homeowner's insurance: $1,200-3,000/year depending on location and coverage.
• HOA fees: $200-500/month in many communities.
• Maintenance: Budget 1-2% of home value annually for repairs and upkeep.
• Closing costs: Typically 2-5% of the purchase price, due at closing.

Steps to Take Before Applying

1. Check your credit report and dispute any errors (free at annualcreditreport.com).
2. Calculate your DTI ratio using our mortgage calculator to see where you stand.
3. Save for a down payment — aim for 20% to avoid PMI, but 3-5% is possible with some programs.
4. Get pre-approved — this shows sellers you are serious and locks in a rate for 60-90 days.
5. Shop multiple lenders — rates can vary significantly, and the effort can save you thousands.