In Freddie Mac’s latest weekly survey (October 1, 2026), the average 30-year fixed rate was 7.28%. At rates like that, a buyer with modest debt and about 10% down can usually afford a home priced at roughly 2.5 to 3 times their gross household income. More debt means less. A solid starting target is a total housing payment under about 28% of gross monthly income, with all debts together under about 36%.
Want your own number right now? Enter your income, debts and down payment into our mortgage calculator and come back for the details.
Afford vs. Approved: Why They’re Different Numbers
A lender’s job is to judge risk. They look at your debt-to-income ratio (DTI), which is your monthly debt payments divided by your gross monthly income. Many conventional loans allow total debts up to around 43% of gross income, and sometimes higher with strong credit or savings.
That’s the most a lender is willing to lend. It isn’t the most you should spend. Your real budget is the lowest of three numbers:
- Your lender ceiling: what you’d be approved for.
- Your comfort budget: what fits alongside groceries, childcare, travel and saving.
- Your cash on hand: the down payment plus closing costs plus a cushion afterward.
The Rules of Thumb (and What Each One Is Good For)
| Rule | How it works | Best used for |
|---|---|---|
| 28/36 | Housing ≤ 28% of gross income; all debts ≤ 36% | A solid baseline for most buyers |
| 36/43 | Total debts up to roughly 43% of gross on many loans | Seeing the lender ceiling, not a target |
| FHA 31/43 | Typical FHA limits, sometimes higher | Buyers using FHA loans |
| 25% of take-home pay | Payment ≤ 25% of after-tax pay (a conservative approach tied to a 15-year loan) | Buyers who want to pay the house off fast |
| 3–5× income | Quick price multiple | A rough first guess; at ~7% rates, expect the low end |
“Housing payment” here means everything you’ll pay each month for the home: principal, interest, property taxes, homeowners insurance, mortgage insurance and HOA dues. Lenders call this PITI, plus any association fees.
On $100,000 of gross income, that’s $8,333 a month. The 28% limit is about $2,333 for housing, and the 36% limit is about $3,000 for all debts combined.
How to Calculate How Much Home You Can Afford
Here’s a realistic example. The buyer earns $100,000 a year (household), carries $800 a month in other debts (a car payment and a student loan), puts 10% down, and gets a 7% 30-year fixed rate.
Step 1: Start with gross monthly income
$100,000 ÷ 12 = $8,333.
Step 2: Run both limits and take the lower one
- 28% of $8,333 = $2,333 for housing
- 36% of $8,333 = $3,000 total debt, minus $800 in existing debts = $2,200 for housing
The second limit is tighter, so $2,200 a month is the cap.
Step 3: Account for everything that isn’t principal and interest
For this example we assumed property taxes of 1% of the home price per year, $150 a month for insurance, and mortgage insurance (PMI) of about 0.6% of the loan per year because the down payment is under 20%. Your numbers will differ. Taxes and insurance vary a lot by state and county, so look up your own.
Step 4: Turn the payment into a price
Working backward from $2,200 a month gives a home price of about $282,000:
| Piece | Monthly cost |
|---|---|
| Principal and interest (on a ~$253,800 loan) | ≈ $1,688 |
| Property taxes | ≈ $235 |
| Mortgage insurance (PMI) | ≈ $114 |
| Homeowners insurance | $150 |
| Total | ≈ $2,187 |
The down payment on this home would be about $28,200.
What the debt cost them: with no other debts, the same buyer would hit the 28% limit instead and could afford roughly $300,000. Those two monthly payments are costing about $18,000 of buying power. Paying them down before you apply is one of the fastest ways to raise your ceiling.
You don’t have to do this by hand. Our home affordability calculator runs the same logic with your numbers.
What Interest Rates Do to Your Budget
Same buyer, same $2,200 monthly cap, same assumptions. Only the rate changes:
| 30-year rate | Approximate home price |
|---|---|
| 6.0% | $307,000 |
| 6.5% | $294,000 |
| 7.0% | $282,000 |
| 7.5% | $271,000 |
Each extra point of interest costs this buyer roughly $23,000 of buying power. For context, the 30-year average moved from 6.58% in late July to 7.28% in early October, and in this example that swing alone is worth around $15,000 to $20,000.
One caution: Freddie Mac’s survey reflects borrowers with 20% down and excellent credit. Your quote could be higher or lower, so get real quotes before you set your budget. Try different rates in the mortgage calculator to see how much room you have.
Quick Reference: Rough Price Range by Income
| Household income | Max housing payment (28%) | Approximate home price |
|---|---|---|
| $50,000 | ≈ $1,167 | ≈ $140,000 |
| $75,000 | ≈ $1,750 | ≈ $220,000 |
| $100,000 | ≈ $2,333 | ≈ $300,000 |
| $125,000 | ≈ $2,917 | ≈ $380,000 |
| $150,000 | ≈ $3,500 | ≈ $460,000 |
Assumes little other debt, a 7% 30-year fixed rate, 10% down, 1% property tax, $150 a month insurance and PMI. Heavy debt, a lower rate or a bigger down payment will move these numbers.
Earning around $50,000? Our guide on whether $50,000 a year is a good salary covers the rest of the budget picture.
The Costs That Quietly Break Budgets
Lenders qualify you on the payment. These are the extras that decide whether you’re comfortable:
- Closing costs: often estimated at 2% to 5% of the loan, due on closing day on top of your down payment.
- Maintenance and repairs: a common rule of thumb is about 1% of the home’s value per year. Older homes can need more.
- Rising taxes and insurance: both can climb after you buy, which raises your payment even with a fixed-rate loan.
- HOA dues: they count toward your DTI and can be sizable.
- Utilities and upkeep: a bigger home usually means bigger heating, cooling and lawn bills.
- Moving and furnishing: easy to forget, and they add up fast.
Down Payment and Loan Type
Your loan type changes both the cash you need and how lenders measure you:
- Conventional: often 3% to 5% down at the low end, with a credit score around 620 typical. Under 20% down usually means PMI.
- FHA: about 3.5% down, with scores as low as roughly 580 considered, and DTI limits often around 31/43.
- VA: 0% down for eligible veterans and service members.
A bigger down payment lowers your payment and can remove PMI, but don’t drain your emergency fund to get there.
The Sleep-at-Night Test
Run your numbers through a few reality checks before you fall in love with a listing:
- Compare against take-home pay, not just gross. After taxes and payroll deductions, a payment that is 28% of gross is often a third or more of what actually lands in your account.
- Do a practice payment. For two or three months, move the difference between your current rent and the projected payment into savings. If it feels tight, your real budget is lower than the formula says.
- Check your cushion after closing. Many planners suggest keeping three to six months of expenses in reserve once the keys are yours.
How to Stretch Your Budget the Smart Way
- Pay down high-payment debts before applying.
- Improve your credit score to qualify for better rates.
- Compare quotes from several lenders. Freddie Mac’s chief economist regularly points out that shopping around can save thousands over the loan’s life.
- Consider adding a co-borrower’s income if it fits your situation.
- Widen your search to areas with lower property taxes.
- Ask sellers about credits toward closing costs or a rate buydown.
Run Your Own Numbers
A rule of thumb gets you in the neighborhood. Your actual income, debts, down payment and local taxes get you the real answer. Try the mortgage calculator with a few scenarios: your ideal price, a price 10% lower and a price 10% higher. Pick the one that still feels comfortable.
When you’re close to buying, talk to a licensed lender about pre-approval. This guide is educational and the figures are illustrations, not financial advice.
Frequently Asked Questions
How much house can I afford on a $100,000 salary?
With little other debt, about 10% down and a rate near 7%, roughly $300,000. With $800 a month in other debts, closer to $280,000. Your rate, down payment, property taxes and insurance can move that number meaningfully.
How much house can I afford on a $75,000 salary?
Roughly $220,000 under the same assumptions. At 28% of gross income, the housing payment tops out near $1,750 a month. A lower rate, bigger down payment or less debt would raise it.
Is the 28/36 rule still realistic?
It’s still a useful baseline, but higher rates and rising insurance and taxes make it harder to hit in many areas. Lenders may approve you above it, but staying near it leaves more room for repairs and savings.
Does pre-approval tell me what I can afford?
Not exactly. Pre-approval shows what a lender would let you borrow, based on DTI and credit. It doesn’t account for your lifestyle, savings goals or job stability, so set your own budget below the approval amount.
Should I use gross or take-home pay to decide?
Lenders use gross income. For your own comfort budget, check the payment against take-home pay too. Some guidance, like Ramsey’s, caps the payment at 25% of take-home.
How much does a higher interest rate change what I can afford?
Quite a bit. In our example, each one-point increase cuts buying power by roughly $23,000. That’s why current rates matter as much as your income.
How much cash do I need besides the down payment?
Plan for closing costs, often 2% to 5% of the loan, plus moving costs and a cash reserve. The full picture is often more than the down payment alone.
Do online affordability calculators give accurate results?
They give good estimates if your inputs are realistic, especially taxes, insurance and rate. Treat the result as a planning number and confirm it with a lender quote.