Short answer: at today's average 30-year mortgage rate of 7.18% (Freddie Mac, November 5, 2026), a household earning $100,000 a year can afford a home of about $292,000, or roughly 2.9 times its income. That assumes 10% down, the 28/36 rule and realistic costs for property tax, insurance and mortgage insurance. On $60,000 the figure is about $164,000; on $150,000, about $452,000. Every point the rate falls adds about 9% to that price, and every point it rises takes away about 8%.
Who this is for: first-time and repeat buyers in the US who want a number to bring to a lender, not just the number a lender will offer. What it does not cover: investment properties, jumbo loans above the conforming limit, and VA or USDA loans in detail. The worked examples use a conventional loan. FHA rules appear where they differ. This is general information, not lending advice, and your county's taxes and insurance can move the result a lot.
The rateWhat a mortgage costs this week
Freddie Mac's Primary Mortgage Market Survey put the average 30-year fixed rate at 7.18% on November 5, 2026. That is down from 7.24% a week earlier and the third weekly decline in a row, but well above the 6.22% of a year ago. The 15-year fixed averaged 6.57%. The survey covers conventional purchase loans for borrowers with strong credit and 20% down, so many buyers will be quoted somewhat more or less. Why rates climbed this autumn is covered in our guide to October's rate jump.
Source: CalculatorAI · calculatorai.app · Freddie Mac PMMS (Nov. 5, 2026, as reported by the Associated Press); NAR existing-home sales (Sept. 2026); CalculatorAI assumptions
The rule28/36, front-end and back-end
Lenders judge affordability with a debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income, which is pay before tax. They look at two versions.
Monthly housing cost ÷ gross monthly income ≤ 28%(Housing cost + car, student, card and other loan payments) ÷ gross monthly income ≤ 36%The lower of 28% × income and (36% × income − other debts)Housing cost means the whole payment: principal, interest, property tax, homeowners insurance, mortgage insurance and any HOA dues. Lenders call it PITI. Other debts means minimum payments that show on your credit report, plus items such as child support. Utilities, phone bills and groceries do not count, which is one reason a lender's number can feel generous.
The 28/36 rule is a long-standing rule of thumb, not a legal limit. The official limits are looser:
Rule of thumb
- Housing ratio
- 28%
- Total ratio
- 36%
Fannie Mae, manually underwritten
- Housing ratio
- No separate cap
- Total ratio
- 36%, or up to 45% with strong credit and reserves
Fannie Mae, Desktop Underwriter (automated)
- Housing ratio
- No separate cap
- Total ratio
- Up to 50%
FHA, manually underwritten
- Housing ratio
- 31%
- Total ratio
- 43%; up to 40%/50% with compensating factors
| Loan | Housing ratio | Total ratio |
|---|---|---|
| Rule of thumb | 28% | 36% |
| Fannie Mae, manually underwritten | No separate cap | 36%, or up to 45% with strong credit and reserves |
| Fannie Mae, Desktop Underwriter (automated) | No separate cap | Up to 50% |
| FHA, manually underwritten | 31% | 43%; up to 40%/50% with compensating factors |
Source: CalculatorAI · calculatorai.app · Fannie Mae Selling Guide B3-6-02 (read Nov. 9, 2026); HUD Handbook 4000.1 via lender summaries; CFPB
The hidden costsHow tax, insurance and PMI shrink the budget
Most online "how much house" answers divide your budget by the principal and interest payment alone. The rest of the bill is real, and on a cheaper home it is a bigger share. Take a $100,000 income and its 28% budget of $2,333 a month:
Counting only principal and interest overstates the price by about $91,000.
Show these figures as a table
| Value ($ home price) | |
|---|---|
| Principal and interest only — $382,707 | 382,707 |
| + property tax — $336,688 | 336,688 |
| + homeowners insurance — $307,589 | 307,589 |
| + mortgage insurance (PMI) — $291,799 | 291,799 |
Source: CalculatorAI · calculatorai.app · CalculatorAI calculation (drafts/how-much-house-can-i-afford-numbers.mjs). Tax 1.0% of price a year, insurance $2,420 a year, PMI 0.5% of the loan a year.
- Property tax. We use 1.0% of the price a year. The state averages in the Tax Foundation's 2026 data range from 0.29% in Hawaii to 1.88% in New Jersey and Illinois, so check your county. Our property tax guide has the state table.
- Homeowners insurance. We use $2,420 a year, a national average for a policy with $300,000 of dwelling coverage (Howmuch.net, March 2026). Other surveys put it closer to $3,000, and Florida averages several times that.
- Mortgage insurance. With less than 20% down on a conventional loan, you pay private mortgage insurance (PMI). The Urban Institute's range is about 0.46% to 1.50% of the loan a year, depending on credit score. We use 0.5%. You can ask to cancel it once you reach 20% equity. FHA loans charge 1.75% up front and usually 0.55% a year, often for the life of the loan.
- HOA dues are not in our examples. If the home has them, subtract them from the budget before you start.
By incomeWhat $60,000, $100,000 and $150,000 can afford
Here are three households at today's rate. Each has a car or student loan payment that rises with income. In all three cases the 28% housing limit is lower than the 36% total limit, so it sets the budget.
$60,000
- Other debts / month
- $300
- Housing budget / month
- $1,400
- 10% down
- $16,404
- Home price
- $164,037
$100,000
- Other debts / month
- $500
- Housing budget / month
- $2,333
- 10% down
- $29,180
- Home price
- $291,799
$150,000
- Other debts / month
- $700
- Housing budget / month
- $3,500
- 10% down
- $45,150
- Home price
- $451,502
| Gross income | Other debts / month | Housing budget / month | 10% down | Home price |
|---|---|---|---|---|
| $60,000 | $300 | $1,400 | $16,404 | $164,037 |
| $100,000 | $500 | $2,333 | $29,180 | $291,799 |
| $150,000 | $700 | $3,500 | $45,150 | $451,502 |
Source: CalculatorAI · calculatorai.app · Freddie Mac PMMS rate (Nov. 5, 2026); CalculatorAI calculation (drafts/how-much-house-can-i-afford-numbers.mjs)
Where the $100,000 household's $2,333 goes
A $291,799 home with $29,180 down and a $262,619 loan at 7.18%. Principal and interest are about three quarters of the payment. The rest is the part people forget to price in. If closing costs come to 3% of the price, which is our assumption here, the cash needed at closing is about $37,934.
When debts set the limit. Give the $100,000 household $900 a month of other payments instead of $500, say a larger car loan plus a student loan. The 36% limit is now $3,000 − $900 = $2,100, lower than the 28% limit of $2,333, so it sets the budget. The affordable price falls to $259,859, about $32,000 less. Paying off a car loan before you apply can be worth more than months of extra saving. How debt payments are eating raises shows why this is common right now.
What a lender might approve. At a 43% total ratio with no separate housing cap, the same three households could qualify for about $225,637, $394,465 and $612,345. That is 35% to 38% more house than the 28/36 rule suggests, and the housing payment alone would take 37% to 37.4% of gross pay. Pre-approval letters are often written at that higher figure.
The median home. NAR's September median was $417,500. With 10% down at 7.18%, the full monthly cost is about $3,252, which needs an income of about $139,371 under the 28% rule. For how this compares abroad, see the salary needed to buy a home by country.
Down paymentWhat 20% changes
Putting 20% down removes PMI and shrinks the loan. For the $100,000 household, the same $2,333 a month then buys about $340,913, which is $49,000 more house. The catch is the cash: $68,183 for the down payment alone, against $29,180 at 10%. Do not drain your savings to reach 20%. A new owner needs a cash cushion for repairs and job loss, so read how big an emergency fund to keep before you decide how much to put down.
The rate leverWhat one point up or down does
Rates move every week, and a single point changes the price of a home more than most buyers expect. For the same monthly budget:
$60,000
- At 6.18%
- $178,619
- At 7.18% (today)
- $164,037
- At 8.18%
- $151,200
$100,000
- At 6.18%
- $317,738
- At 7.18% (today)
- $291,799
- At 8.18%
- $268,963
$150,000
- At 6.18%
- $491,637
- At 7.18% (today)
- $451,502
- At 8.18%
- $416,168
| Gross income | At 6.18% | At 7.18% (today) | At 8.18% |
|---|---|---|---|
| $60,000 | $178,619 | $164,037 | $151,200 |
| $100,000 | $317,738 | $291,799 | $268,963 |
| $150,000 | $491,637 | $451,502 | $416,168 |
Source: CalculatorAI · calculatorai.app · CalculatorAI calculation (drafts/how-much-house-can-i-afford-numbers.mjs)
A one-point drop raises the affordable price by about 8.9%, and a one-point rise lowers it by about 7.8%. On a fixed $400,000 loan, principal and interest are $2,710 a month at 7.18%, $2,445 at 6.18% and $2,985 at 8.18%. A year ago, at 6.22%, the $100,000 household could have afforded about $316,636.
Waiting for a lower rate is a bet, not a plan. If rates do fall after you buy, you may be able to refinance, and our refinance guide shows when that pays. At today's rate, sellers are also more willing to pay for a rate buydown, which buying a home at 7% prices out.
Your own numberFour steps before you talk to a lender
Start from gross monthly pay
Divide your annual income before tax by 12. If your pay varies, use what you can show for the past two years, because that is what a lender will use.
Take the lower of two limits
Multiply by 28%. Separately, multiply by 36% and subtract your minimum debt payments. The smaller result is your housing budget.
Subtract the costs that are not the loan
Take off monthly property tax, insurance, HOA dues and PMI for the homes you are looking at. What is left is the principal and interest you can carry.
Test it against your real budget
Lenders use gross pay, but you pay bills from take-home pay. Check the payment in your budget next to childcare, savings and retirement contributions.
The mortgage calculator turns a price, rate, down payment, tax and insurance into a monthly payment, so you can try the homes you are actually looking at. To check the payment against your take-home pay, put it into a budget tracker for a month or two before you apply. If the 28% figure is more than about half of your take-home "needs" in the 50/30/20 budget, the house is likely to feel tight.
Common questionsFAQ
Is the 28/36 rule based on gross or net income?
Gross income, meaning pay before tax and deductions. That is how lenders calculate DTI. Because take-home pay is lower, the share is bigger in practice: if 20% of your pay goes to tax and deductions, 28% of gross pay is 35% of what reaches your account.
What is a good debt-to-income ratio for a mortgage?
36% or less in total is comfortable for most households. Fannie Mae allows up to 50% on automated approvals and FHA can go higher with compensating factors, but those ratios leave little room for anything else.
How much house can I afford on $75,000 a year?
About $212,000, using the same assumptions and $400 a month of other debts. That is about 2.8 times income at today's rate. Adjust for your own taxes, insurance and debts in the mortgage calculator.
Does the 28% include property tax and insurance?
Yes. The 28% covers the whole housing payment: principal, interest, property tax, homeowners insurance, mortgage insurance and HOA dues. Leaving them out is the most common reason a budget turns out too high.
Should I plan to borrow against the home later if money gets tight?
No. A home equity loan or HELOC needs equity you will not have in the first years, and it adds another payment. See HELOC vs home equity loan for how they work once you do.
Can extra payments make a bigger mortgage affordable?
They lower the total interest, not the required monthly payment, so they do not help you qualify. Once you own the home, extra mortgage payments at 7% shows what they save.
Where these numbers come fromSources and assumptions
Every price above comes from one script, drafts/how-much-house-can-i-afford-numbers.mjs, using the standard fixed-rate payment formula. The inputs:
- Rate: Freddie Mac PMMS 30-year fixed average, 7.18% for the week of November 5, 2026, with 7.24% the week before and 6.22% a year earlier, as reported by the Associated Press. We could not open Freddie Mac's own page on the day of writing.
- Lending limits: Fannie Mae Selling Guide B3-6-02, read directly. FHA ratios from HUD Handbook 4000.1 as summarised by lenders, including a 2026 mortgagee letter on borrowers below a 580 score. The CFPB confirms that lenders set their own DTI limits.
- Home price: National Association of Realtors, September 2026 median existing-home price of $417,500, as reported by the Associated Press.
- Costs: property tax 1.0% of price a year (Tax Foundation state averages run from 0.29% to 1.88%); insurance $2,420 a year (Howmuch.net, March 2026); PMI 0.5% of the loan a year (Urban Institute range 0.46% to 1.50%, via secondary sources); FHA premiums of 1.75% up front and 0.55% a year from lender summaries.
Which way the assumptions lean. Insurance is held at $2,420 for every home, which understates it on the $452,000 example and overstates it on the $164,000 one. A credit score below about 700 means a higher rate and higher PMI, which lowers every price. No HOA dues are included. Low-tax states such as California or Colorado raise the result, and Texas, New Jersey and Illinois lower it.
The takeawayBring your own number
At 7.18%, a budget built on the 28/36 rule, with taxes, insurance and PMI included, buys about 2.7 to 3.0 times your income with 10% down. Work out your figure before you ask for pre-approval, because the lender's figure will usually be higher. Pay down debts that count against the 36% limit, keep a cash cushion after closing, and watch the rate: a point either way moves your price by roughly 8% to 9%.
