How Much House Can I Afford? The US Mortgage Affordability Guide
"How much house can I afford?" is the first question for any US homebuyer. This guide explains the 28/36 rule, how lenders assess your income and debts, and how down payment and interest rates shape your budget — with worked examples.
Before you start browsing listings, you need an honest answer to one question: how much house can I afford? In the US, lenders use clear rules of thumb to decide, and understanding them lets you set a realistic budget before you fall for a home outside your reach. This guide explains the 28/36 rule, how down payment and interest rates change the math, and works through real examples.
Once you have a price in mind, our US Mortgage Calculator shows the monthly payment. First, let's work out what you can afford.
How much house can I afford? The 28/36 rule
The most widely used guideline is the 28/36 rule:
- 28% — your total monthly housing costs (mortgage principal, interest, property taxes and insurance) should not exceed 28% of your gross monthly income.
- 36% — your total monthly debt payments, including housing plus car loans, student loans and credit cards, should not exceed 36% of gross monthly income.
Lenders use these ratios — known as front-end and back-end debt-to-income (DTI) — to judge whether you can comfortably handle repayments.
Worked example: a $60,000 salary
Say you earn $60,000 a year, or $5,000 gross per month. Applying the 28/36 rule:
- 28% of $5,000 = $1,400 maximum monthly housing cost.
- 36% of $5,000 = $1,800 maximum total monthly debt.
If you have a $400/month car payment, that leaves $1,400 for housing under the back-end rule too. At current interest rates, a $1,400 monthly budget (after allowing for taxes and insurance) might support a mortgage of roughly $200,000–$230,000, depending on your rate and down payment. Remember your budget depends on take-home pay too — see our guide to US paycheck deductions.
How your down payment changes affordability
Your down payment is the cash you put in upfront. A larger down payment reduces the loan you need and can eliminate private mortgage insurance (PMI), which lenders require when you put down less than 20%. PMI adds to your monthly cost, so avoiding it stretches your budget further.
For example, on a $250,000 home:
- A 20% down payment ($50,000) means a $200,000 loan and no PMI.
- A 10% down payment ($25,000) means a $225,000 loan plus monthly PMI.
How interest rates affect what you can afford
Interest rates have an outsized effect on affordability. Because a mortgage is repaid over 30 years, even a one-point difference in the rate changes the monthly payment significantly. When rates rise, the same monthly budget buys a smaller loan — which is why your affordable price can shift month to month. Test different rates in our US Mortgage Calculator to see the effect.
Don't forget the hidden costs
Affordability isn't just the mortgage. Budget for property taxes (which vary hugely by state and county), homeowners insurance, HOA fees where applicable, and ongoing maintenance — often estimated at around 1% of the home's value per year. Buyers who forget these end up "house poor". For a broader look at whether ownership makes sense at all, read our guide on rent vs buy.
Frequently asked questions
How much house can I afford on a $60,000 salary?
Using the 28/36 rule, your monthly housing budget is about $1,400. Depending on your interest rate, down payment and other debts, that typically supports a home priced around $200,000–$230,000.
What is the 28/36 rule?
It's a lending guideline: housing costs should stay under 28% of gross monthly income, and total debt payments under 36%. Lenders use these debt-to-income ratios to assess mortgage applications.
How much down payment do I need?
You can buy with as little as 3–5% down on many loans, but putting down 20% avoids private mortgage insurance (PMI) and lowers your monthly cost. A larger down payment also increases how much home you can afford.
What is PMI?
Private mortgage insurance is an extra monthly charge lenders require when your down payment is under 20%. It protects the lender, not you, and can be removed once you build enough equity.
Do interest rates really change how much I can afford?
Yes, significantly. Because the loan is repaid over 30 years, even a one-percentage-point rate change noticeably alters the monthly payment, so higher rates reduce the loan your budget supports.
This article was last reviewed in 2026. Figures are estimates for guidance only — always confirm with a licensed mortgage lender.