Before you tour homes or talk to lenders, answer one question honestly:
👉 How much house can I actually afford?
In 2026, with mortgage rates in the mid-6% range and higher living costs, affordability depends on income, debt, credit score, down payment, and lifestyle—not just what a bank approves.
This guide shows you how to calculate home affordability in the USA (2026) using lender rules and a safer personal budget—plus examples and tips to avoid becoming house-poor.
The Two Rules That Matter
🏦 Lender Rule (DTI)
Most lenders want:
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Front-end DTI: ≤ 28% of gross income (housing only)
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Back-end DTI: ≤ 36%–43% (housing + all debts)
🧠 Personal Comfort Rule (Safer)
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Housing ≤ 25% of gross income
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Leaves room for savings, repairs, and life
👉 Banks approve the maximum; you should choose the comfortable number.
What Counts as “Housing Cost”?
Include all of these:
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Mortgage (principal + interest)
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Property taxes
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Homeowners insurance
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HOA fees (if any)
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PMI/MIP (if <20% down)
Step-by-Step: Calculate Your Budget
1️⃣ Start With Gross Monthly Income
Example: $90,000/year → $7,500/month
2️⃣ Pick Your Housing Percentage
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Bank max (28%): $2,100
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Safer (25%): $1,875
3️⃣ Subtract Non-Mortgage Costs
Assume:
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Taxes + insurance + HOA: $450
Remaining for mortgage:
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$1,425–$1,650
4️⃣ Translate Payment → Home Price
At ~6.6% (30-yr fixed):
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$1,500/month ≈ $250k–$275k loan
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Add down payment to get purchase price
Quick Affordability Examples (2026)
| Annual Income | Safer Monthly Housing | Approx Home Price* |
|---|---|---|
| $60,000 | $1,250 | $180k–$210k |
| $90,000 | $1,875 | $260k–$310k |
| $120,000 | $2,500 | $350k–$420k |
| $150,000 | $3,125 | $440k–$520k |
*Assumes ~6.6% rate, average taxes/insurance, 10%–20% down.
Down Payment: How It Changes Everything
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20% down: No PMI → lower payment
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10% down: Some PMI → higher payment
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3%–5% down: FHA/first-time programs → higher monthly, easier entry
📌 Bigger down payment = more house or safer payment.
Credit Score’s Impact on Affordability
| Credit Score | Rate Impact | Buying Power |
|---|---|---|
| 760+ | Lowest rates | Highest |
| 700–759 | Slightly higher | Strong |
| 680–699 | Noticeably higher | Reduced |
| <680 | Costly | Limited |
Rates are influenced by market conditions guided by the Federal Reserve, but your credit profile determines your final deal.
How Much Will a Bank Approve vs What You Should Buy?
Banks may approve $450k—but:
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Repairs
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Utilities
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Furniture
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Taxes rising
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Life surprises
👉 Buying 10%–20% below approval = less stress.
Hidden Costs Buyers Forget
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Maintenance (1% of home value/year)
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Utilities (often higher than renting)
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Closing costs (2%–5%)
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Moving & setup costs
Plan for them before you buy.
Tax Notes (FYI)
Mortgage interest and property taxes may be deductible if you itemize, subject to limits under rules enforced by the Internal Revenue Service. Always run the after-tax math.
2026 Smart Buyer Checklist
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⬜ Keep DTI under 36%
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⬜ Emergency fund intact (3–6 months)
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⬜ Fixed-rate mortgage preferred
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⬜ Shop 3–5 lenders
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⬜ Don’t stretch for FOMO
Final Verdict (2026)
Affordability isn’t about the biggest loan—it’s about the safest payment.
If the payment fits your life, the house fits your future.