How Much House Can You Really Afford in 2026?
The old "3x your salary" rule is dangerously outdated. Here is what actually matters in 2026.
The traditional advice of "buy a home worth 3x your annual salary" was created in an era of 4% mortgage rates. With rates hovering around 6.5-7% in 2026, that rule could leave you house-poor. Here is the modern approach to figuring out what you can truly afford.
The 28/36 Rule Still Works
Your monthly housing payment (mortgage + taxes + insurance) should not exceed 28% of your gross monthly income. Your total debt payments should stay under 36%. On a $75,000 salary, that means a maximum housing payment of $1,750/month.
But the Real Number Is Your "Sleep Well" Number
Forget the bank's maximum approval. What payment lets you live comfortably, save for retirement, and still enjoy life? For most people, that is 20-25% of gross income, not 28%. A $6,250/month gross income means a comfortable payment of $1,250-1,560 — which buys a $200,000-250,000 home at current rates.
The Hidden Costs Nobody Mentions
Property taxes: 0.5-2.5% of home value annually. Homeowners insurance: $1,200-3,000/year. Maintenance: budget 1-2% of home value per year. PMI if under 20% down: $100-300/month. A $300,000 home costs $1,800-2,200/month all-in, not just the $1,600 mortgage payment.
Run Your Own Numbers
Use our home affordability calculator to see your personalized numbers. Then check your closing costs and debt-to-income ratio to get the full picture.