How much house can I afford on a $80,000 salary?

On an $80,000 salary (~$6,667/month gross), the 28% rule limits your PITI (principal, interest, taxes, insurance) payment to about $1,867/month. With a 20% down payment and 7% rate, that payment supports a home price of roughly $280,000–$310,000 depending on your local property taxes and insurance rates.

What is the 28/36 rule for a mortgage?

The 28/36 DTI rule states: your monthly housing cost (PITI) should not exceed 28% of your gross monthly income, and your total debt payments (housing + car loan + student loans + credit cards) should not exceed 36%. Lenders use this to determine how much mortgage you qualify for.

What is PITI in a mortgage?

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a monthly mortgage payment. Principal is the loan repayment, Interest is the borrowing cost, Taxes are property taxes (typically 1–2% of home value annually), and Insurance includes homeowner's insurance and PMI if your down payment is under 20%.

How much down payment do I need for a house in 2026?

You need a minimum of 3%–3.5% down for conventional or FHA loans. However, putting down 20% eliminates Private Mortgage Insurance (PMI), which costs 0.5%–1.5% of the loan amount per year. On a $300,000 loan, that's $1,500–$4,500/year in PMI savings, making 20% down a significant long-term financial advantage.

What are the hidden costs of buying a house?

Beyond your mortgage payment, home buyers should budget for: closing costs (2%–5% of purchase price), property taxes (1%–2% annually), homeowner's insurance ($1,200–$2,400/year), HOA fees ($0–$1,000+/month), maintenance (1% of home value annually), PMI if applicable, and moving costs.

How Much House Can I Actually Afford in 2026? A Step-by-Step Guide

28%

Max housing cost of gross income (front-end rule)

36%

Max total debt of gross income (back-end rule)

20%

Ideal down payment to skip PMI

$412K

Median US home price, 2026

Buying a home in 2026 feels more challenging than ever. With rising interest rates and high property values, understanding your true affordability is the most critical step before you ever tour a house.

⚠️

The #1 Mistake First-Time Buyers Make

Most buyers focus only on the monthly mortgage payment. The real cost—taxes, insurance, maintenance, and PMI—can add 30–50% more per month than the loan payment alone.

💰 The Four Pillars of Housing Cost (PITI)

Every month, a homeowner pays more than just principal and interest. Lenders underwrite you on PITI:

Component	What It Is	Typical Cost ($400K Home)
P — Principal	Pays down your loan balance	Varies by rate
I — Interest	Cost of borrowing (6–7% in 2026)	$1,500–1,800/mo
T — Taxes	Property tax (0.3–2.5% of value/year)	$500–833/mo
I — Insurance	Homeowner's insurance	$100–250/mo
PMI (if <20% down)	Protects the lender, not you	$100–300/mo extra

💡

Budget an Extra $500–800/Month

Set aside money beyond PITI for maintenance (~1% of home value/year), utilities ($200–500/mo), and unexpected repairs. Your home warranty won't cover everything.

📊 The 28/36 Rule: Your Borrowing Limit

Lenders use your Debt-to-Income (DTI) ratio to determine how much they'll lend you. Two limits apply:

28/36 DTI Visual Guide

Front-End

28% of gross income → housing

28% max

Back-End

36% of gross income → all debts

36% max

💵

Sarah's Situation ($8K/mo income)

Gross Monthly Income$8,000

Car Loan$450/mo

Student Loans$300/mo

Credit Cards (min)$100/mo

Total Non-Housing Debt$850/mo

28% Rule Allows

$2,240

for housing

36% Rule Allows

$2,030

after $850 debt

✅ Max housing budget: $2,030/month (back-end is the binding constraint)

🏠

What $2,030/month buys at 6.5%

Max Home Price (20% down)~$320,000

Max Home Price (5% down)~$290,000

Required Down (20%)$64,000

Required Down (5%)$14,500

20% Down (no PMI)

$1,620

P&I only

5% Down (+PMI)

$1,900

P&I + PMI

🏗️ Hidden Costs Most Buyers Forget

Cost	When	Typical Amount	Pro Tip
Closing Costs Critical	At closing	2–5% of loan ($8K–20K)	Ask seller to cover part
HOA Fees	Monthly	$50–800/mo	Review HOA financials before buying
Maintenance Reserve	Ongoing	1% of home value/year	Set aside $300–400/mo
Utilities	Monthly	$200–500/mo	Ask seller for 12 months of bills
Property Tax Increases	Annual	2–5%/year	Factor into your long-term budget

📈 Down Payment Scenarios Compared

$350,000 Home — Monthly Cost by Down Payment Size

3% Down

P&I + PMI + Taxes + Insurance

~$2,850

10% Down

P&I + smaller PMI

~$2,550

20% Down

P&I, no PMI

~$2,200

3% Down Total Monthly

$2,850

→

Save with 20% Down

$650/mo

🎯 5-Step Home Affordability Checklist

1️⃣

Calculate Gross Income

Sum all verified income

Include salary, bonuses (2yr avg), rental (75%) — exclude irregular windfalls

2️⃣

List All Monthly Debts

Every credit report line

Car loans, student loans, credit card minimums, personal loans

3️⃣

Set Down Payment

Aim for 20% if possible

Eliminates PMI, lowers rate, builds instant equity

4️⃣

Budget Closing Costs

2–5% of loan amount

$8,000–20,000 on a $400K home — must be liquid cash at closing

5️⃣

Get Pre-Approved

Before house hunting

Sellers take pre-approved buyers seriously; pre-qualification is not enough

💡

Improve Credit Score

Every 20 pts = ~0.2% lower rate

On $350K loan: 680 vs 740 score = $41,760 saved over 30 years

❌ 5 Common Home Buying Mistakes

Mistake	Why It Hurts	The Fix
Pre-qualified, not pre-approved	Sellers won't take you seriously	Get fully pre-approved before shopping
Maxing out your budget	No cushion for repairs, job loss	Target 75–80% of max loan approval
Skipping inspection	$500 saved → $50K foundation repair	Always negotiate an inspection clause
Ignoring opportunity cost	$80K down could earn 8–10% in market	Run the full buy-vs-rent numbers
Buying before financial readiness	No emergency fund = foreclosure risk	Have 6-month emergency fund before buying

🏡

Use Our Mortgage Calculator

Get your exact monthly payment including P&I, property taxes, PMI, and insurance — then test different down payment scenarios side-by-side. Try the Mortgage Calculator →

🎯 Key Takeaways

Your real monthly cost is PITI — always budget 30–50% above the loan payment
Use the 28% front-end rule AND the 36% back-end rule — whichever is lower limits you
20% down eliminates PMI and saves $100–300/month on a $350K home
Budget 2–5% of the loan for closing costs (must be liquid cash)
Every 20-point credit score improvement can save $40K+ over the loan life
Get pre-approved — not pre-qualified — before making any offers