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Free home affordability calculator. Enter your income, debts, and down payment to find out exactly how much house you can afford in your state in 2026.
The 28/36 rule is the standard most lenders use — your total housing costs shouldn't exceed 28% of gross monthly income, and total debt payments shouldn't exceed 36%.
The 28/36 rule is the standard most lenders use — your total housing costs shouldn't exceed 28% of gross monthly income, and total debt payments shouldn't exceed 36%. For a household earning $85,000, that means a maximum housing budget of about $1,983 per month. But how much home that buys depends heavily on where you live and how much you put down.
Location matters more than most buyers realize. Property taxes alone range from 0.28% of home value in Hawaii to 2.49% in New Jersey — a difference of over $500 per month on a $300,000 home. Add homeowner's insurance (which varies from 0.25% to 0.95% by state) and the same income buys dramatically different homes in different states.
Your down payment is the other major lever. Putting 20% down eliminates Private Mortgage Insurance (PMI), which typically costs 0.4-0.55% of the loan amount annually. On a $300,000 home with 5% down, PMI adds roughly $130 per month to your costs — reducing the home you can afford by $15,000-20,000 compared to a 20% down payment scenario.
The difference between what a bank will lend you and what you can comfortably afford is often $50,000-$100,000. Banks approve loans based on your maximum debt-to-income ratio — but living at your maximum leaves no room for savings, emergencies, or lifestyle. This calculator shows you both numbers so you can make an informed choice. If you're deciding between renting and buying, our rent vs buy calculator compares the 5-year cost of each option.
Your monthly mortgage payment is only part of the true cost of homeownership. Understanding all five components helps you set a realistic budget.
**Principal and interest: 60-70% of payment.** This is the actual loan repayment. On a $350,000 home with 20% down and a 6.5% rate, principal and interest is approximately $1,770/month. The interest portion dominates early in the loan — in year one, roughly 70% of each payment goes to interest.
**Property taxes: 15-20% of payment.** Property tax rates vary dramatically by state and county. Texas averages 1.8% ($6,300/year on a $350,000 home). New Jersey averages 2.4%. Oregon averages 0.9%. This calculator uses your state's average rate.
**Homeowners insurance: 5-8% of payment.** Standard coverage costs $1,200-$3,000/year depending on location, home value, and coverage level. Flood zones, hurricane-prone areas, and wildfire zones cost significantly more.
**PMI (if <20% down): 5-10% of payment.** Private mortgage insurance adds 0.5-1.5% of the loan amount annually until you reach 20% equity. On a $280,000 loan, PMI costs $1,400-$4,200/year.
**HOA fees (if applicable): varies.** Condos and planned communities charge $200-$500/month. Some luxury communities charge $1,000+/month. Always include HOA in your affordability calculation.
Three financial ratios determine your borrowing power. Lenders use these to decide how much they'll lend you.
**1. The 28% rule (front-end ratio).** Your total monthly housing cost — mortgage, taxes, insurance, PMI, HOA — should not exceed 28% of your gross monthly income. On a $100,000 salary, that's $2,333/month maximum for housing.
**2. The 36% rule (back-end ratio).** Your total monthly debt — housing plus car payments, student loans, credit cards, and other obligations — should not exceed 36% of gross income. If you have $500/month in existing debt, your housing budget drops from $2,333 to $1,833. Use our rent vs buy calculator to compare this against renting.
**3. Down payment.** The standard is 20% down, but FHA loans allow as little as 3.5% and some conventional loans allow 3%. Less down means a larger loan, higher monthly payments, and mandatory PMI. On a $350,000 home: 20% down = $280,000 loan. 5% down = $332,500 loan — a $52,500 difference.
**4. Interest rate.** Every 0.5% rate increase reduces your purchasing power by approximately 5%. At 6.0%, a $2,000/month payment buys a $333,000 home. At 7.0%, the same payment buys only $300,000.
**5. Credit score.** Borrowers with 760+ scores get the best rates (often 0.5-1.0% lower than borrowers with 680 scores). Over 30 years on a $300,000 loan, a 0.75% rate difference costs $54,000 in additional interest.
For a complete comparison of owning vs renting, use our rent vs buy calculator. And learn more about how we source our rate data from Freddie Mac and the Federal Reserve.
These strategies can increase your purchasing power by $20,000-$80,000.
**Pay down existing debt first.** Reducing your car payment or student loan payment by $300/month frees up $300/month for housing — that's roughly $50,000 more in purchasing power at current rates.
**Improve your credit score.** Moving from a 680 to a 760 score can save 0.5-1.0% on your rate. On a $300,000 loan, that saves $100-$200/month — or lets you afford a $30,000-$60,000 more expensive home at the same monthly payment.
**Consider a 15-year mortgage.** Rates on 15-year loans are typically 0.5-0.75% lower than 30-year loans. The monthly payment is higher, but you build equity faster and pay far less interest over the life of the loan.
**Look at first-time buyer programs.** FHA loans (3.5% down), VA loans (0% down for veterans), and USDA loans (0% down in rural areas) can dramatically reduce the cash needed to buy. Many states also offer down payment assistance grants — search for your state's housing finance agency. Learn more about how we calculate affordability.
State-specific note
This calculator uses state-specific property tax rates (from the Tax Foundation) and homeowner's insurance rates (from NAIC data) for all 50 states. The same income can afford a home worth $80,000+ more in a low-tax state like Hawaii (0.28% property tax) compared to a high-tax state like New Jersey (2.49%). Your result reflects actual cost differences in your state, not a national average.
This calculator uses the 28/36 qualifying ratio, the standard used by most conventional mortgage lenders. The front-end ratio (28%) limits housing costs — mortgage principal and interest, property taxes, homeowner's insurance, and PMI — to 28% of gross monthly income. The back-end ratio (36%) limits total debt payments (housing plus car loans, student loans, credit cards) to 36%. The calculator uses whichever constraint is more restrictive.
From your maximum monthly housing budget, the calculator subtracts estimated property taxes (state average effective rates from the Tax Foundation), homeowner's insurance (state averages from NAIC data), and PMI if applicable. The remaining amount is available for mortgage principal and interest, which is converted to a maximum loan amount using the present value of annuity formula at current mortgage rates (Freddie Mac PMMS, March 2026). The maximum home price equals the loan amount plus your down payment.
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