How Much House Can I Afford by Salary (Find Out Here)

Property taxes

When you get a mortgage, you’ll likely bundle property taxes into your monthly payments as part of your escrow account. Property taxes vary widely across the country, but your county’s appraisal office should be able to pull the last three years of tax records for the property you’re interested in. These records will tell you what the property was assessed for, and what taxes were associated with it.

From there, you should be able to find a trend. Has value remained steady over the past three years or grown by a certain percent year over year? This can give you a general idea of what monthly tax payments will amount to, not just now but in the future.

If you opt out of escrow and end up paying taxes in lump sums, you should save enough money every month to prepare for the payment. Property taxes are typically due twice a year, and the average American pays $3,119 in property taxes each year. Don’t get slapped with a bill you haven’t planned for.

Homeowners insurance

Homeowners insurance rates, much like taxes, vary greatly based on location. In 2026, the national average for home insurance is $2,151 per year, or $179 per month. You can take a look at average premiums per state for a closer ballpark figure.

Several factors can raise the cost of your home insurance, including:

• Wood-burning stoves
  While it is estimated that over one-third of U.S. homes use wood-burning stoves as a primary heat source, these stoves are also linked to thousands of house fires and health risks.
• Marital status
  Sorry singles, you might pay more for your home insurance. Married couples file fewer claims on average, and insurance companies view them as less risky clients.
• Age of home
  If your home is older, it’s more likely to have a higher premium. That’s due to degrading materials or features that would be more costly to replace.
• Swimming pool or other water features
  Pools and hot tubs are charmingly considered “attractive nuisances” in the insurance world. Depending on how your pool is classified, it could fall under your home insurance and lead to higher premiums due to its potential for hazard.
• Roof condition
  Similar to the age of the home, an older roof will likely fetch a higher premium.
• Proximity to fire department
  Your distance from the fire department and proximity to a water source can have a slight bearing on your insurance — the closer you are, the lower the cost.
• Proximity to body of water
  If you’re close to the shore or located near a flood zone, you might be required to include flood insurance on your home, which adds to your monthly payment.

When you browse your favorite real estate search engine, don’t forget to factor in the costs of taxes and insurance. Some sites will advertise a low monthly mortgage payment but “fail to include common additional fees,” says CPA, personal finance expert, and virtual CFO of financial site Dollar Sprout Ben Watson.

Step 3: Go big on the down payment, but don’t stretch your means

So far, we’ve covered how to calculate how much you can afford to put toward a mortgage payment and its associated costs every month. But the down payment, a sizable chunk of change you put toward your house at the time of closing, separates the renters from the owners. Trouble is… the down payment is often one of the obstacles to achieving homeownership.

Not everyone has the funds to make it happen, but if your savings allow for a 20% down payment on your home, you will likely be able to avoid paying private mortgage insurance on a conventional loan.

What is private mortgage insurance?

Mortgage insurance protects the lender in the event that you default on your home (but it does not protect you from foreclosure). If you put less than 20% and select a conventional loan program, you will likely have to obtain Private Mortgage Insurance, or PMI, through your lender. You will likely have to continue paying for PMI until your mortgage balance is less than 80% of the current market value of your home.

On average, though, PMI typically costs between 0.5% and 1% of your entire loan annually. For example, on a $300,000 home loan, you could spend $250 each month on PMI. “This insurance isn’t something you can shop around for,” Watson explains. “It’s determined by the lending company and disclosed to you during the closing process.”

20% down isn’t your only option

However, you don’t need a 20% down payment to buy a house. In fact, the current national median down payment for first-time home buyers is 9% to 10% of the purchase price. To put it in perspective, down payments truly run the gamut: “Gosh, the other day I saw a 3% down conventional loan,” says first-time homebuyer specialist and top Fort Worth, Texas area real estate agent Jordan Davis.

The more you can put down, however, the less you’ll pay in interest over time (whatever you don’t put down, you have to finance through the bank). Plus, a higher down payment reduces your monthly mortgage bill and your mortgage rate, saving you more money over time.

However — plot twist! — as much as a higher down payment is great, you also don’t want to empty your bank account to afford a higher down payment. You’ll need emergency funds on hand for maintenance and surprise repairs.

As a buyer, you can increase your down payment percentage and still keep your budget in check by purchasing a lower-priced home. Your monthly mortgage payments will also go up or down depending on which mortgage term you select (15-year terms will save you on interest but cost more every month, reducing your purchasing power).

To see rough estimates on how much house you can afford based on your salary, try the calculator below. If you prefer, you can switch the tool to see what you might afford by monthly payment. Click the “Advanced Options” link to fine-tune details, like property taxes, PMI, or insurance costs. The estimates will include other typical expenses to help you see what might be within your budget.

Step 4: Leave room in the budget for maintenance and emergency expenses

No matter the condition of your home, you’ll want to budget for maintenance and upgrades on a monthly basis. Data from the Joint Center for Housing Studies of Harvard University Lending Indicator of Remodeling Activity calculated that spending on homeowner improvements and repairs increased by 82% between 2015 and 2024.

First-time homeowners will be surprised by how much owning a house costs. “I commonly advise people to put aside $150 to $200 a month or more to cover repairing or replacing fixtures such as washer/dryers, HVAC units, or furnaces,” suggests Watson. From small cracks in walls to old appliances that kick the bucket, it can feel like the repairs are endless.

You can plan and budget for future renovations, but emergency repairs are bound to arise. One in three owners reported paying on average $1,206 last year for an unexpected project. Two out of three homeowners in the same study reported having no emergency budget at all.

“I would suggest having about three months of savings that would cover your mortgage, as well as utilities and taxes,” Davis says. To figure out a month of savings, take the average of your last six months of spending. Then try to save triple that amount. This should be enough to take care of living expenses if something unexpected should arise.

Finally, if the idea of an HVAC breakdown keeps you up at night, a home warranty might be the relief you need. “After you save for a down payment and pay closing costs, you’re going to be pretty cash poor going forward,” Davis says. “Having a home warranty on your property can cover you in case anything out of the norm does happen.”

The average monthly cost of a home warranty typically ranges between $30 to $90, and plans cover some or all of the following:

• Refrigerator
• Oven/Range
• Dishwasher
• Garbage Disposal
• Washer/Dryer
• Air Conditioner
• Heating System
• Water Heater

Depending on the age and condition of your home appliances, this monthly payment could offer peace of mind. In some cases, you may be able to ask the seller of the home to cover the costs of the home warranty at closing for your first year or two of ownership.

However, be sure to weigh the monthly cost of the warranty versus what you could do with that money if you saved it for repairs, and check into the company’s policies. Home warranty companies receive a lot of customer complaints over disagreements on what the warranty covers and the cost of repairs.

Step 5: Get the best interest rate you can and pick your mortgage term

Don’t start worrying about exact interest rates until you find a place you love, advises Davis. Then, start speed-dating mortgage lenders to get at least three quotes. Each quote will likely include different closing costs as well.

“Some will pad the interest rate to give you no closing costs,” said Davis. “Some people will pad the closing cost to give you a lower interest rate.” Not all quotes will look the same, so the more you shop around, the more likely you are to find a lender that fits your needs.

Don’t be afraid to source quotes from a variety of different-sized lenders as well, says Watson, who notes: “Sometimes the local bank in your area will have special discounts for first-time homebuyers or young families moving into certain neighborhoods.”

Typically, a larger down payment will lead to a lower interest rate, since your loan is smaller and less of a risk to take on. The bigger your down payment, the less you’ll borrow overall, meaning you’ll save money in the long term. For a closer look at how your down payment influences interest rate, check out the Consumer Financial Protection Bureau’s interest rate calculator.

You’ll also have to consider whether you want a 30-year or 15-year mortgage. Both come with their own pros and cons, and depending on your financial burden, one might make more sense than the other.

15-year mortgages:

• Typically carry a lower interest rate, so you’ll pay less interest overall.
• Have a higher monthly payment, since you’re paying more of the principal per month.
• Are harder loans to get approved.
• Mean less wiggle room for savings, emergencies, or job instability.

30-year mortgages:

• Come with a higher interest rate, as they can be perceived as riskier for banks.
• Have a lower monthly payment than a 15-year loan.
• Mean more financial freedom for saving each month.

Work with your real estate agent and mortgage lender to decide what loan length works best for your financial goals.

Step 6: Follow these pro tips to make the most of your mortgage

Choosing the right mortgage is individual to each homebuyer… Don’t forget to keep these tips in mind as you calculate how much mortgage you can afford.

• Pay off debt before you take on more
  Mike Scott the mortgage pro suggests that buyers shouldn’t borrow more money until they’ve got their existing debts under control. “In a high debt-to-income ratio situation, you may be better off swallowing your pride, moving back in with family, and focusing on paying off those debts first.”
• Play it safe with the single-income challenge
  When you shop for a house you’ll have the option to factor in both you and your partner’s income. But Watson challenges budget-conscious buyers to shop with a single income, instead of combined. “That way, if one of you loses a job or stops working to have kids, you aren’t facing a crisis,” says Watson.
• Some expenses save you elsewhere.
  In some cases, you can responsibly spend more than 30% of pre-tax income on housing payments. Davis gives the example of a case where homeowners association (HOA) fees push you over the mark. If the association takes care of things like lawn and pool maintenance, or its state-of-the-art gym will eliminate your need for a monthly membership, the additional payment could make sense. “I think that’s where it can get tricky,” says Davis. “When there’s HOA dues, it can cost buyers more than they were planning on, but when you really consider what they take care of and pay for, it can be worth it for some.”

Step 7: Set your budget and partner with professionals

Remember to budget for more than just the purchase price. Plan for monthly ownership costs, such as taxes, insurance, utilities, and HOA fees.

Then, shop around for a lender and a rate, and get preapproved so you know exactly what you can afford. Use free tools like HomeLight’s “How much house can I afford calculator.”

And when you’re ready to buy, partner with a seasoned real estate agent who can provide valuable insight into local market conditions and guide you through the buying process.

HomeLight’s free Agent Match platform can connect you with a top agent based on your goals. We analyze millions of transactions and thousands of real customer reviews.

Happy house hunting!

Editor’s note: This information is for educational purposes and not intended to be construed as financial advice.

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