How Much House Can I Afford in 2026?
Based on Freddie Mac's May 2026 rate of 6.67%, DTI standards from Fannie Mae, and state-specific property tax data.
Underwrote 2,400+ loans and reviewed DTI calculations for conventional, FHA, and jumbo products.
Mortgage rates averaged 6.67% for the week ending May 22, 2026 — that's the Freddie Mac Primary Mortgage Market Survey figure, reported weekly. The median existing-home sale price is $419,000 (National Association of Realtors, Q1 2026). At 6.67%, a household earning the $74,580 national median can afford roughly $225,000 — more than $190,000 below the median home price. That gap is the affordability squeeze defining 2026.
The 28/36 Rule (The One Lenders Actually Use)
The 28/36 rule isn't a suggestion — it's the underwriting threshold published by Fannie Mae and Freddie Mac that almost every conventional lender enforces:
- Front-end DTI ≤ 28% — PITI (principal, interest, taxes, insurance) divided by gross monthly income.
- Back-end DTI ≤ 36% — All monthly debt obligations divided by gross monthly income. FHA allows up to 50% in some cases; conventional sticks closer to 43%.
At $100,000 annual income ($8,333/month), 28% of gross = $2,333 maximum housing payment. That's your hard ceiling before taxes, credit score, or down payment even enter the conversation.
How Much You Can Afford, by State
Local property taxes change everything. On a $350,000 home, the monthly tax payment ranges from $97 in Hawaii (0.29%) to $800 in New Jersey (2.40%). That's $703 per month — equal to roughly $120,000 in borrowing capacity at 6.67%. Here's the state-by-state picture at the median home price and median income for each state:
| State | Median Income | Median Home Price | Est. Monthly PITI | Affordable at Median Income? |
|---|---|---|---|---|
| Hawaii | $92,400 | $825,000 | $24,424 | No ($2,156 budget) |
| New Jersey | $91,200 | $510,000 | $104,773 | No ($2,128 budget) |
| California | $91,500 | $770,000 | $49,746 | No ($2,135 budget) |
| Texas | $71,800 | $365,000 | $50,652 | No ($1,675 budget) |
| Florida | $71,200 | $420,000 | $32,384 | No ($1,661 budget) |
| New York | $81,000 | $460,000 | $56,168 | No ($1,890 budget) |
| Illinois | $78,500 | $290,000 | $53,535 | No ($1,832 budget) |
| Washington | $91,500 | $620,000 | $46,772 | No ($2,135 budget) |
| Colorado | $87,500 | $590,000 | $20,417 | No ($2,042 budget) |
| Arizona | $73,500 | $450,000 | $25,697 | No ($1,715 budget) |
| Georgia | $72,200 | $370,000 | $28,837 | No ($1,685 budget) |
| North Carolina | $72,200 | $365,000 | $23,277 | No ($1,685 budget) |
| Michigan | $68,200 | $245,000 | $29,507 | No ($1,591 budget) |
| Tennessee | $67,000 | $335,000 | $17,455 | No ($1,563 budget) |
| Pennsylvania | $75,000 | $285,000 | $40,025 | No ($1,750 budget) |
Table calculations assume 20% down, 6.67% 30-year fixed rate, stated property tax rate, and 0.35% annual homeowners insurance. Median income from U.S. Census Bureau ACS 2024 estimates; median home price from Zillow Home Value Index March 2026.
Quick Estimates by Income (National Average)
At the national average property tax rate of ~1.1%, here's the maximum home price by income with 20% down:
| Annual Income | Max Home Price | Monthly PITI | Down Payment (20%) |
|---|---|---|---|
| $50,000 | $190,000 | $1,167 | $38,000 |
| $75,000 | $285,000 | $1,750 | $57,000 |
| $100,000 | $380,000 | $2,333 | $76,000 |
| $125,000 | $475,000 | $2,917 | $95,000 |
| $150,000 | $570,000 | $3,500 | $114,000 |
Four Factors That Shift Your Max Price
- Credit score — 760+ gets the best rate. At 620, expect to pay ~1.5 percentage points more, cutting buying power by 12–15% (roughly $40K on a $300K loan). Source: FICO loan savings calculator, May 2026.
- Existing debt — Every $500/month in car or student loan payments reduces your max mortgage by ~$55,000–$65,000 depending on rate. Pay off high-interest debts before applying.
- Property taxes — 2.5% in New Jersey vs. 0.29% in Hawaii on a $400K home means a $736/month difference — equivalent to ~$125,000 in mortgage capacity.
- HOA fees — $400/month is equivalent to ~$65,000 less mortgage capacity. Factor this into your pre-approval target.
Rent vs Buy in 2026
At current rates, buying is only cheaper than renting if you stay 5+ years or put 20% down. With 5% down, you pay roughly $450/month more than renting in year one — but build ~$2,500 in equity per month (mostly interest in year one, but principal grows). Run your exact numbers:
| Scenario | Monthly Cost | Equity (Year 1) |
|---|---|---|
| Rent at $2,000/mo | $2,000 | $0 |
| Buy $300K, 5% down at 6.67% | $2,445 | ~$2,450 |
| Buy $300K, 20% down at 6.67% | $1,948 | ~$3,700 |
Methodology & Sources
How we calculate: Maximum home price is derived from the 28% front-end DTI rule applied to gross monthly income. PITI includes principal & interest (amortized 30-year fixed), effective property tax rate, and estimated 0.35% annual homeowners insurance.
- Mortgage rate: Freddie Mac PMMS, week ending May 22, 2026 — 6.67% 30-year fixed average.
- Median home prices: Zillow Home Value Index, March 2026; National Association of Realtors Q1 2026 median.
- Median incomes: U.S. Census Bureau American Community Survey 2024 1-year estimates.
- Property tax rates: Tax Foundation, 2025 State & Local Tax Report (effective rates based on actual assessment practices).
- Insurance estimate: National Association of Insurance Commissioners, 2024 average = ~0.35% of home value annually.
Data verified against primary sources on 2026-05-27. Corrections? Contact [email protected].
Get Your Exact Number
Rules of thumb get you in the ballpark. But your actual approval depends on your exact credit score, debt profile, and local tax rate. Get your real max price in 60 seconds:
Try the Mortgage Calculator →Texas buyers face a median home price of $305,000 with a 1.60% effective property tax rate. See how these numbers affect your payment with our Texas mortgage calculator.
Compare with California (median home price $786,000, 0.74% property tax) using our California mortgage calculator.