How Much House Can I Afford on My Salary? (2026 Rule of Thumb)
Staring at listings and wondering if you’re even in the right price range? The fastest way to find out is a simple ratio between your income and your monthly housing payment. Below is the rule lenders actually use, plus a real numbers example so you can see exactly where the line falls for you.
The Quick Answer: The 28/36 Rule
Most lenders size your mortgage using the 28/36 rule:
- 28% — Your monthly housing payment (principal, interest, taxes, insurance — often called PITI) shouldn’t exceed 28% of your gross monthly income.
- 36% — Your total debt payments (housing plus car loans, student loans, credit cards) shouldn’t exceed 36% of your gross monthly income.
“Gross” means before taxes — your salary as stated, not your take-home pay. Some conventional loans allow debt-to-income (DTI) ratios up to 43-45% for well-qualified borrowers, but 28/36 is the safer, more comfortable target most financial planners recommend.
How Much House Does That Actually Buy?
Here’s a worked example with real numbers.
Assumptions:
- Gross annual salary: $85,000 ($7,083/month)
- 28% housing ratio → max monthly payment: $1,983
- Down payment: $25,000 (about 8.5% on a $295,000 home)
- Mortgage rate: 6.75% (illustrative 30-year fixed rate, as of 2026 — verify current rates before you shop, since they move weekly)
- Property tax + homeowners insurance: roughly $400/month combined (varies significantly by state and zip code)
The math:
That leaves about $1,583/month for principal and interest ($1,983 − $400 for taxes/insurance). At 6.75% over 30 years, $1,583/month supports a loan of roughly $231,000. Add the $25,000 down payment, and this buyer’s realistic budget lands around $256,000, not the $400,000+ some online guesses might suggest.
That gap — between “salary times a multiplier” and “what your actual payment supports” — is exactly why the 28/36 rule beats rough multipliers like “3x your salary.” Two buyers with the same income but different debt, down payment, or local tax rates can afford very different homes.
Want your own numbers instead of this example? Run your specific income, down payment, and rate through our free mortgage calculator to see your real monthly payment and affordable price range in seconds.
What Counts Toward Your 36% Debt Limit?
Lenders add up every recurring debt payment, not just housing:
- Car payments
- Student loan payments
- Minimum credit card payments
- Personal loan or EMI-style installment payments
- Child support or alimony, if applicable
Utilities, groceries, insurance premiums, and subscriptions don’t count toward DTI — but they absolutely count toward your real-life budget, which is why some buyers who technically qualify still feel house-poor.
How Down Payment Changes Your Affordability
A bigger down payment does two things: it shrinks your loan amount, and it can shrink your monthly payment enough to buy you a higher price range within the same 28% cap.
| Down Payment | Loan Needed for $300,000 Home | Approx. Monthly P&I (6.75%, 30-yr) |
|---|---|---|
| 5% ($15,000) | $285,000 | $1,849 |
| 10% ($30,000) | $270,000 | $1,752 |
| 20% ($60,000) | $240,000 | $1,557 |
Putting down 20% also lets most conventional loans skip private mortgage insurance (PMI), which typically runs 0.5%-1.5% of the loan amount per year — another cost that eats into your 28% housing budget if you’re financing above 80% loan-to-value.
Don’t Forget the Costs Beyond Principal and Interest
Your “affordable” number isn’t just P&I. Budget for:
- Property taxes (varies widely by state — some areas run under 0.5%, others over 2% of home value annually)
- Homeowners insurance
- PMI, if your down payment is under 20%
- HOA fees, if applicable
- Maintenance — a common guideline is 1% of home value per year set aside
Before you commit, map out your full monthly picture — not just the mortgage — with our daily budget planner, so you know exactly what’s left over after housing.
FAQ: How Much House Can I Afford
Does the 28/36 rule use my salary before or after taxes?
Before taxes (gross income). Lenders calculate DTI ratios against your gross monthly income, not your take-home pay.
Is 3x my salary a good rule of thumb for home price?
It’s a rough starting point, but it ignores your down payment, debt, interest rate, and local taxes — all of which swing the real number significantly, as shown in the example above. The 28/36 rule gives a more accurate picture.
Can I afford a house with student loans?
Yes, but your student loan payment counts toward your 36% total DTI limit, which reduces how much is left over for a mortgage payment. Income-driven repayment plans can sometimes lower the payment lenders count.
What credit score do I need to get the best mortgage rate?
Generally, a score of 740 or higher qualifies for the best conventional rates as of 2026, though FHA loans allow lower scores with a larger down payment or mortgage insurance. Requirements shift, so confirm current thresholds with a lender.
Should I buy at the top of my affordability range?
Not necessarily. Many buyers deliberately stay below their maximum approved amount to leave room for savings, retirement contributions, and unexpected expenses. If you’re weighing buying versus investing that extra cushion, our investment calculator can help you compare long-term outcomes.
Every situation is different — loan type, credit score, local taxes, and market conditions all move the number. Use the examples above as a starting point, then run your exact figures through our free mortgage calculator to get a payment estimate built around your income, down payment, and rate. For decisions this size, it’s also worth a conversation with a mortgage lender or financial advisor before you make an offer.