How Much House Can I Afford in 2026?

The 28/36 rule in plain terms

Lenders and planners often use a simple guideline to answer how much house you can afford. NerdWallet describes the 28/36 rule this way:

• 28%: spend no more than 28% of your gross (pre-tax) monthly income on home costs. That means the mortgage payment, property tax and homeowners insurance.
• 36%: keep all your debt payments together, including the mortgage, car loans, student loans and card minimums, at or below 36% of gross income.

It is a rule of thumb, not a hard limit. NerdWallet notes that some borrowers qualify at higher ratios depending on their credit score and loan type. A lender approving you for more does not mean the payment will feel comfortable.

How much house you can afford by income

The table shows the highest home price where the full monthly cost stays at 28% of gross income. We show it at today’s 7.40% rate and at one point lower, to show how much rates matter.

Source: our calculation. Assumptions: 30-year fixed loan, 20% down (so no PMI), Freddie Mac’s 7.40% average rate as of Oct 15, 2026, property tax of 0.90% of the price per year (ATTOM’s 2025 national average) and homeowners insurance of $2,490 a year (NerdWallet’s national average, May 2026). No HOA fees and no other debts. Prices rounded to the nearest $1,000.

The median household income was $87,460 in 2025, according to the Census Bureau. At today’s rates, that income supports a home of about $291,000, well below the $417,500 median existing-home price NAR reported for September 2026.

How we calculated the table

Here is the method, so you can repeat it with your own numbers:

1. Find your housing limit. Divide gross yearly income by 12 and multiply by 0.28. On $100,000 that is $2,333 a month.
2. Take out insurance. We used $2,490 a year, or about $208 a month, leaving about $2,126 for the mortgage and property tax.
3. Solve for the price. At 7.40% over 30 years, each $100,000 borrowed costs about $692 a month in principal and interest (our calculation). With 20% down, each $100,000 of home price needs an $80,000 loan (about $554 a month) plus about $75 a month in property tax at 0.90%.
4. Divide. $2,126 divided by about $629 per $100,000 of price gives roughly $338,000.

Change any input and the answer moves. A higher tax rate, a bigger insurance bill or a smaller down payment all lower the price.

What it takes to buy the median home

For a $417,500 home with 20% down at 7.40%, our calculation gives:

Source: our calculation using NAR, Freddie Mac, ATTOM and NerdWallet figures, Oct 2026.

To keep $2,833 at 28% of gross income, a household needs roughly $121,000 a year (our calculation), plus about $83,500 for the down payment and money for closing costs.

How other debts shrink your budget

The 36% half of the rule kicks in when you carry other debts. Take the median income of $87,460. Thirty-six percent of monthly income is about $2,624 for all debts. With no other debts, the 28% housing limit of $2,041 is the one that binds.

Now add $800 a month in car and student loan payments. Only $1,824 is left for housing under the 36% cap, and the affordable price drops to about $257,000 (our calculation), roughly $34,000 less. Paying off a car loan before you shop can do as much as a raise. Our car loan calculator shows what your current loan costs each month.

Other factors that change the answer

• Your mortgage rate. Freddie Mac’s 7.40% average assumes good to excellent credit and 20% down. A lower credit score usually means a higher rate and less house.
• Down payment. Putting less than 20% down usually adds private mortgage insurance and raises the loan amount, which lowers the price you can afford at the same payment.
• Property tax where you live. ATTOM’s state averages run from 0.33% in Hawaii to 1.84% in Illinois. In a high-tax state, the same income buys noticeably less.
• Insurance. NerdWallet’s $2,490 average is for $400,000 of dwelling coverage, and rates vary a lot by state.
• Upkeep and utilities. The 28/36 rule ignores repairs and bills. Check the average utility bill and keep an emergency fund for big items like a new roof or furnace.

Should you buy at the top of your range?

Not necessarily. The 28/36 rule sets a ceiling, not a target. Many households choose a lower price to leave room for saving, travel or a growing family. If the numbers are tight, compare the full cost of owning with renting in our rent vs buy calculator before you commit.

See how we research every number on our method page, browse more budgeting guides, or try all our calculators.