How Much House Can I Afford?

"How much house can I afford?" is usually asked as if it had one answer, and the answer a lender gives is usually the one that gets repeated. But a lender's maximum and a household's maximum are answers to two different questions. The lender is asking how much debt this income can probably service without defaulting. You are asking how much house payment this income can carry while the rest of your life — savings, repairs, the car, the kids, a job loss — still fits around it. This page works the same household through both sets of math, line by line, at the current national average rate, so you can see exactly where the two answers split and by how much.

The rate behind every number on this page

Every figure below uses one rate: 7.24%, the average 30-year fixed rate in Freddie Mac's Primary Mortgage Market Survey for the week ending October 29, 2026. It is a national average for conventional purchase loans with 20% down and excellent credit — your own quote will differ — but it is the honest baseline, and it is the same rate used across our Mortgages & Housing hub. At 7.24% over 30 years, principal and interest run $681.50 a month per $100,000 borrowed. That single figure drives everything that follows: at today's rates, every extra $100,000 of house is roughly another $682 a month, before tax and insurance add their share.

The 28/36 rule, step by step

The rule runs on your debt-to-income ratio — DTI. The Consumer Financial Protection Bureau defines DTI as all your monthly debt payments divided by your gross monthly income, and it is the first number a lender computes. The 28/36 guideline turns that one ratio into two caps:

• 28% — the housing cap. Your full housing payment — principal, interest, property tax, homeowners insurance, plus PMI and HOA dues if you have them — should not exceed 28% of gross monthly income.
• 36% — the total-debt cap. Housing plus every other monthly debt payment — car loans, student loans, card minimums — should not exceed 36% of gross monthly income.

Run our example household through it. Gross income of $100,000 a year is $8,333.33 a month. The housing cap is 28% of that: $2,333.33. The total-debt cap is 36%: $3,000.00 — and after the household's $550 of other debts (a $450 car payment and $100 of card minimums), the back-end cap leaves $2,450.00 of room for housing. The front-end cap is smaller, so it binds: the housing budget is $2,333.33 a month, all-in. Note what "all-in" already does to the answer — this budget has to cover tax and insurance too, not just the loan.

From a monthly budget to a price: the honest version

Now convert the budget into a house. With 20% down there is no PMI, so the payment has three parts: principal and interest on an 80% loan, property tax, and insurance. For tax and insurance this example uses two stated planning assumptions — property tax at 1.0% of the home's price per year, and insurance at a flat $200 a month. Real tax rates vary enormously by state and county, and your figures will differ; the method is the point, and you can re-run it with your own local numbers.

Look at where the budget goes. The loan itself — the part buyers shop for — takes $1,850.49. Tax and insurance take $482.85, more than a fifth of the whole payment, for costs that have nothing to do with the price you negotiated. That is the first place lender math and honest math diverge: any affordability figure built on principal and interest alone overstates what you can buy, and the section after next measures that error exactly.

What 10% down really costs

Keep the same income, the same debts and the same $2,333.33 budget, but put 10% down instead of 20%. Two things change: the loan is 90% of the price instead of 80%, and below 20% down a conventional loan carries private mortgage insurance — PMI. Freddie Mac puts typical PMI at $30 to $70 a month for every $100,000 borrowed; this example uses the $50 midpoint.

The monthly payment is identical to the cent. The house is not: the smaller down payment costs $51,780 of house — $339,415 falls to $287,635 — because PMI and the larger loan's interest eat budget that would otherwise buy rooms. And PMI is not a one-year toll. On this loan, scheduled payments alone do not bring the balance down to 80% of the original price — the point where federal law lets you request cancellation — until month 103, about eight years and seven months in. Paid at its starting figure until then, PMI totals roughly $13,332. (The real total runs somewhat lower, because premiums are recalculated as the balance falls; and the servicer must end PMI automatically at 78% of the original value.) None of this makes 10% down wrong — for many buyers it is the only route in — but it is a price, and this is its size.

The lender's number: bigger, and why

Now the other answer. The 28/36 rule is a budgeting guideline, not an approval standard — no lender is required to use it, and the largest buyer of conventional mortgages does not. Fannie Mae's Selling Guide caps the total debt-to-income ratio at 36% for manually underwritten loans, allows up to 45% when the borrower meets its credit-score and reserve requirements, and allows up to 50% for loans approved through its automated Desktop Underwriter system. The guide sets no 28% housing cap at all.

Give our household the 45% ceiling. Total debts may reach $3,750.00 a month; after the $550 of other debts, housing gets $3,200.00. At 20% down and the same rate, tax and insurance assumptions, that budget supports a price of $477,303 — a $381,842 loan, $2,602.25 of principal and interest, $397.75 of tax, $200 of insurance. The house payment alone takes 38.4% of gross income; with the other debts counted, the household sits exactly at the 45% ceiling.

That is a legal, approvable loan — and it is $137,888 more house than the 28/36 answer on the same income. The difference is not arithmetic; it is intent. The lender's ceiling is set where loans, on average across millions of borrowers, still perform. It is not set where your household budget still works — it does not know your childcare costs, your savings target, or what a roof repair runs. A pre-approval letter tells you the most a lender will risk on you. It was never designed to tell you what you can afford.

The most common mistake: capping principal and interest only

Between the honest answer and the lender's answer sits an error that needs no lender at all — buyers make it themselves, and listing sites invite it, by applying the 28% cap to the loan payment alone. Watch what it does. If principal and interest alone may reach $2,333.33, the loan becomes $342,383 and, at 20% down, the price becomes $427,979. But tax and insurance did not disappear; they were merely uninvited. On that house, tax at the same 1.0% assumption is $356.65 a month, and with $200 of insurance the real payment is $2,889.98 a month — 34.7% of gross income, and $556.65 a month more than the budget the buyer believed they had set. The price was overstated by $88,563, not by a lender's salesmanship but by leaving two lines out of the sum. Every affordability figure you meet — in an ad, a listing, or a calculator — deserves one question: is that payment principal and interest, or is it the whole payment?

What you can afford at other salaries

The same method at other incomes — 20% down, the same $550 of monthly debts, the same rate and the same tax and insurance assumptions. Notice that the binding cap changes as income rises: at lower salaries the 36% total-debt cap, squeezed by the car payment and card minimums, bites before the 28% housing cap does. Your other debts are quite literally part of your house price — which is why the order in which you clear them matters, as our debt payoff strategies hub works through.

Two levers move these numbers more than any other, and both are visible in the table's construction. The first is the rate: DTI runs on your gross pay — the figure before tax, which is why the paycheck math in Paychecks & Taxes matters here — and the second is the $550 of other debts. Remove the car payment entirely and the $75,000 household's cap rises from $1,700 to $1,750 and its binding constraint flips; clear the debts on a $60,000 salary and the cap jumps from $1,250 to $1,400, a 12% raise in house budget without a cent more income. Whether a card's rate leaves room to clear it faster is the judgment our guide to what a good APR for a credit card is helps you make.

What these numbers leave out

Three honest limits. First, the tax and insurance inputs are planning assumptions, not quotes: property tax at 1.0% of price is a middle-of-the-country figure, and in high-tax states the same house can carry twice the tax line — which is why the method matters more than any single row of the tables. Second, a housing payment is not the whole cost of a house: HOA dues, maintenance and repairs sit outside DTI entirely, and a budget that passes 28/36 can still be the wrong budget if it leaves nothing for them. Third, every figure here holds the rate still at 7.24%. Mortgage rates move with the bond market and the Federal Reserve's path — the subject of the Fed and your wallet — and a point either way moves the prices in these tables by tens of thousands of dollars. Re-run the math at the rate you are actually quoted. Our full methodology is on how we calculate.