How much house can you afford? Get your personalized price range using the 28/43 DTI method with 2026 rates.
With the average 30-year fixed mortgage rate at 6.75% in 2026 and the conforming loan limit at $806,500, affordability remains stretched in many markets. The 28/43 DTI rules are the standard lender guidelines — our calculator applies both and uses the binding (lower) constraint. Property taxes vary from 0.29% (Hawaii) to 2.49% (New Jersey) and significantly affect your monthly payment.
Mortgage lenders use two debt-to-income (DTI) ratios to determine how much home you can afford: the front-end ratio and the back-end ratio. Understanding both is essential to knowing your true buying power in 2026.
The front-end ratio looks at your proposed monthly PITI (Principal, Interest, Taxes, Insurance) payment as a percentage of your gross monthly income. Lenders typically want this at no more than 28% for conventional loans. On a $120,000 annual income, your maximum monthly housing payment is $120,000 × 28% ÷ 12 = $2,800/month.
The back-end ratio adds all monthly debt payments (car loans, student loans, credit cards, personal loans) to your housing payment. Most conventional lenders cap this at 43%. With $500/month in existing debts on a $120,000 income: ($120,000 × 43% ÷ 12) − $500 = $3,800/month available for housing. The lower of the two limits — $2,800 in this case — is your actual constraint.
At 6.75% for 30 years, each $1,000 of monthly P&I payment supports approximately $149,900 in loan amount. Subtract estimated taxes and insurance from your maximum PITI payment to get available P&I, then add your down payment to determine maximum purchase price. Because property taxes and insurance vary by location, our calculator uses state-specific 2026 effective rates for accuracy.
Their Situation:
Calculation:
Consult a licensed real estate agent and mortgage lender for an accurate pre-approval based on your complete financial profile.
Gross Income
Lenders use your pre-tax income. Both W-2 wages and verifiable self-employment income count. Two-year averages are used for variable income sources like bonuses, overtime, and freelance work.
Monthly Debt Load
Every $100/month in minimum debt payments reduces your buying power by roughly $15,000 at 2026 rates. Paying off debts before applying for a mortgage can significantly increase what you can borrow.
Down Payment
A larger down payment means a smaller loan, lower monthly payment, and potentially no PMI (at 20%+). It also signals financial stability to lenders and may qualify you for better interest rates.
Credit Score
At 6.75% vs 7.5%, a $400,000 mortgage costs about $200 less per month. Good credit saves tens of thousands over the life of a loan and lets you qualify for more house.
Location & Property Taxes
Texas property taxes (1.80%) add $675/month on a $450K home. In Hawaii (0.29%), that same home costs only $109/month in taxes. Your location dramatically affects real affordability.
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On a $100,000 annual salary with no other debts, you can generally afford a home priced between $350,000 and $450,000 using the 28% front-end DTI rule at current rates around 6.75%. Your maximum monthly housing payment (PITI — principal, interest, taxes, insurance) would be about $2,333 ($100,000 × 28% ÷ 12). The exact amount depends on your down payment, credit score, existing debts, and local property taxes. Consult a licensed real estate agent and mortgage lender for a personalized pre-approval.
The 28/43 rule says your monthly mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income (front-end DTI), and your total debt payments should not exceed 43% of gross income (back-end DTI). The binding constraint is whichever limit is lower. Many lenders today use a 43% back-end DTI limit as the maximum, though FHA loans allow up to 50% with compensating factors and strong credit.
Your credit score directly affects your mortgage interest rate, which significantly changes how much house you can afford. Borrowers with 760+ credit scores typically qualify for rates 0.5–1.0% lower than borrowers with 620 scores. On a $400,000 mortgage, a 1% rate difference changes your monthly payment by about $240 and your total interest cost by over $85,000 over 30 years. Higher scores also unlock better loan programs and eliminate the need for costly mortgage insurance in some cases.
Yes, always include property taxes (and homeowner's insurance) in your affordability calculation. Lenders use PITI — Principal, Interest, Taxes, and Insurance — when calculating your DTI ratio. Property taxes vary widely by state: New Jersey averages 2.49%, while Hawaii averages just 0.29%. This difference can add hundreds of dollars to your monthly payment and dramatically change how much house you can afford in different states. Our calculator uses state-specific 2026 effective property tax rates.
Minimum down payment requirements depend on loan type: Conventional loans require 3–5% down (with PMI below 20%), FHA loans require 3.5% down (with 580+ credit score), VA loans require 0% down for eligible veterans and active-duty military, and USDA loans require 0% down in eligible rural areas. A larger down payment reduces your loan amount, lowers your monthly payment, eliminates PMI at 20%+, and may qualify you for better interest rates. The 2026 conforming loan limit is $806,500.
Disclaimer: Home affordability calculations are estimates for educational purposes only. Actual loan approval depends on your complete financial profile, lender policies, and current market conditions. Rates and costs change frequently. Consult a licensed real estate agent and mortgage lender before making home-buying decisions.