Everything Costs More. Can You Still Afford a Home?
You feel it every week. Groceries cost more. Gas costs more. Car insurance is up 20% from two years ago. Childcare, healthcare, even a bag of dog food — everything has gotten more expensive. And somewhere in the back of your mind, there is a question that keeps getting louder: can I still afford to buy a home?
You are not imagining it. The squeeze is real. And housing, the single biggest expense in most Americans' lives, has been hit the hardest. But here is what I have learned after 20 years in the mortgage industry: the answer is not the same for everyone. It depends on your income, your debts, your location, and how you run the numbers. Most people never run the numbers. They just assume they cannot afford it and stop looking. That is a mistake.
The Affordability Squeeze: By the Numbers
Let me show you what has actually happened over the past five years. These are not projections or opinions. These are the numbers.
| Category | 2020 | 2026 | Change |
|---|---|---|---|
| Median home price | $330,000 | $420,000+ | +27% |
| 30-year mortgage rate | 2.7% | 6.2% | +130% |
| Monthly payment (median home, 20% down) | ~$1,075 | ~$2,060 | +92% |
| Median household income | $68,000 | $82,000 | +21% |
| Grocery prices (CPI) | Baseline | +25% | +25% |
| Car insurance | Baseline | +38% | +38% |
Read that middle row again. The monthly payment on a median priced home has nearly doubled. Incomes are up 21%. That gap is the affordability crisis in one line.
It Is Not Just Housing. Everything Takes a Bigger Bite.
What makes today's affordability challenge different from past decades is that housing is not the only thing squeezing your budget. The cost of everything around it has gone up too.
- Groceries: A family of four now spends roughly $1,100 per month on food, up from about $880 in 2020.
- Car insurance: The average annual premium has climbed past $2,300, up 38% since 2020.
- Childcare: The average cost of daycare now exceeds $1,200 per month in most metro areas.
- Healthcare: Premiums and out of pocket costs continue to rise 5% to 8% annually.
- Gas and energy: Despite recent stabilization, energy costs remain 20% to 30% above pre-2021 levels.
When lenders calculate how much house you can afford, they look at your debt-to-income ratio. But that ratio does not capture what you spend on groceries, gas, childcare, or insurance. Those costs come out of the same paycheck. So even if a lender says you can afford a $2,200 monthly mortgage payment, you have to ask yourself: can I actually live on what is left?
The 28/36 Rule: Your Real Affordability Guardrail
The 28/36 rule has been around for decades and it has never been more relevant. Here is how it works:
- 28% (front-end ratio): Your total monthly housing costs — mortgage principal, interest, property taxes, homeowner's insurance, and HOA fees — should not exceed 28% of your gross monthly income.
- 36% (back-end ratio): Your total monthly debts, including housing plus car payments, student loans, credit cards, and any other obligations, should not exceed 36% of your gross income.
Some loan programs will let you push to 43% or even 50% on the back end. Just because you qualify does not mean you should. When groceries, gas, and insurance are all higher than they were a few years ago, that buffer between 28% and 43% is where your quality of life lives.
What Can You Actually Afford? Salary by Salary.
I ran the numbers at current rates (30-year fixed around 6.2% as of February 2026) using the 28% front-end rule, assuming 10% down, 1.1% property tax, and $150 per month for insurance. Here is what the math says:
| Annual Salary | Max Monthly Housing | Approx. Home Price |
|---|---|---|
| $50,000 | $1,167 | $170,000 - $190,000 |
| $60,000 | $1,400 | $210,000 - $230,000 |
| $70,000 | $1,633 | $250,000 - $270,000 |
| $80,000 | $1,867 | $280,000 - $310,000 |
| $100,000 | $2,333 | $360,000 - $400,000 |
| $120,000 | $2,800 | $440,000 - $490,000 |
| $150,000 | $3,500 | $560,000 - $620,000 |
These assume no other monthly debts. Car payments, student loans, or credit card minimums will lower your home price range. Use our calculator to enter your exact debts and see your real number.
Example: A Couple Earning $80,000 Combined
Gross monthly income: $6,667
28% housing limit: $1,867/month
Existing debts: $350/month (car payment) + $250/month (student loans) = $600
36% total debt limit: $2,400 — minus $600 in debts = $1,800 available for housing
The back-end ratio ($1,800) is now more restrictive than the front-end ($1,867). Their real max housing payment is $1,800. At 6.2% with 10% down, that supports a home around $270,000 to $285,000.
The median home price is $420,000. That is a $135,000 gap. This is why the affordability conversation matters.
The Wage vs. Home Price Gap
In 2000, the median home cost roughly 3.5 times the median household income. By 2020, it had climbed to about 4.8 times. Today, it sits closer to 5.1 times.
That ratio tells you something simple: homes are taking a larger share of what Americans earn than at any point in recent history. And when you layer mortgage rates on top of that, the monthly payment has become the real barrier, not just the sticker price.
A $400,000 home at 2.7% (2020 rates) costs about $1,306 per month in principal and interest. That same home at 6.2% costs about $2,193. Same house. Same price. $887 more per month, just because of when you are buying. Over 30 years, that is an extra $319,000 in interest.
Where Rates Are Right Now
As of early February 2026, the average 30-year fixed mortgage rate sits around 6.16%, and the 15-year fixed is at 5.73%. Rates have been hovering in a narrow range for the past few weeks, caught between a slowing economy and stubborn inflation.
Upcoming labor market data could push rates in either direction. If the job market softens, we could see rates move toward the multi-year lows we touched briefly in January. If employment stays strong, rates could push back toward December highs.
The takeaway: rates are not going back to 3%. But they do not need to. Even a drop from 6.2% to 5.5% on a $350,000 loan would save you about $155 per month, or roughly $56,000 over the life of the loan. Every fraction of a percent matters at these levels.
So What Should You Do?
Here is what I tell everyone who asks me whether they can afford a home in this market:
- Run your real numbers. Not a back-of-the-napkin guess. Enter your actual income, your actual debts, your actual down payment, and today's actual rates into a calculator that accounts for taxes, insurance, and PMI. The number might be lower than you hoped. Or it might surprise you.
- Use the 28% rule, not the lender's max. What a lender approves you for and what you can comfortably afford are two different numbers. In a world where everything else costs more, give yourself breathing room.
- Factor in the costs lenders do not count. Groceries, childcare, gas, utilities, insurance — these do not show up in your DTI ratio, but they show up in your bank account. Be honest about your full monthly picture.
- Do not wait for perfect rates. If you can afford a home at 6.2%, you can always refinance if rates drop. You cannot go back in time to buy a home at a lower price. Time in the market matters more than timing the market.
- Consider the alternative. If buying does not work right now, that is a valid answer too. Renting and investing the difference is a legitimate strategy, especially in high cost markets or short time horizons. We built a Rent vs Buy Calculator for exactly this question.
Why I Built the Affordability Calculator
I built the Home Affordability Calculator because the generic advice out there does not cut it anymore. "You can afford 3 to 4 times your income" was a fine rule of thumb when rates were 4%. At 6.2%, that rule is dangerously wrong.
Our calculator uses the 28/36 rule with your actual inputs: income, debts, down payment, current rates, property taxes, insurance, and PMI. It does not tell you what a lender would approve. It tells you what you can realistically afford while still living your life.
It also shows you a payment breakdown so you can see exactly where every dollar goes: principal, interest, taxes, insurance, and PMI. No surprises. No fine print. Just your numbers.
The Bottom Line
Everything does cost more. That is not going to change overnight. But the question is not whether homes are affordable in general. The question is whether a home is affordable for you, with your income, your debts, and your down payment, at today's rates. And affordability varies wildly by location — check whether your city is currently a buyer's or seller's market for the full picture.
The median first-time homebuyer is now 40 years old. That number keeps climbing because people keep waiting for conditions to improve instead of understanding where they actually stand. Some of them could have bought years ago. Some of them genuinely cannot afford to buy yet and that is okay too.
Either way, the first step is the same: know your number. Not a guess. Not what your friend paid. Not what a headline told you. Your actual, calculated, personalized number. Run it.
Frequently Asked Questions
How much house can I afford on an $80,000 salary?
On an $80,000 salary with no other debts, using the 28% front-end DTI rule, your maximum monthly housing payment would be about $1,867. At current rates around 6.2% with 10% down, that supports a home price of roughly $280,000 to $300,000. With existing debts like car payments or student loans, that number drops. Use our affordability calculator with your specific debts and down payment to get an accurate number.
How much house can I afford on a $100,000 salary?
On a $100,000 salary with no other debts, the 28% rule allows about $2,333 per month for housing. At current rates around 6.2% with 20% down, that supports a home price of roughly $380,000 to $420,000 depending on property taxes and insurance in your area. With a 10% down payment, expect closer to $340,000 to $370,000 since PMI will eat into your budget.
What is the 28/36 rule for mortgages?
The 28/36 rule is a guideline lenders use to determine how much you can afford. Your total housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income. Your total monthly debts including housing should not exceed 36% of gross income. Some loan programs allow higher ratios, but stretching beyond 28/36 increases your financial risk, especially when everyday costs are elevated.
How much has housing affordability changed since 2020?
Dramatically. The median home price rose from about $330,000 in early 2020 to over $420,000 by 2026. Meanwhile, mortgage rates went from historic lows around 2.7% to over 6%. The monthly payment on a median priced home has roughly doubled. Wages have grown about 21% in the same period, creating a widening gap between income and housing costs.
Can I afford a house if I have student loans?
Yes, but student loans reduce how much house you can afford because they count toward your back-end debt-to-income ratio. For example, if you earn $80,000 and have $400 per month in student loan payments, your maximum housing payment drops significantly. That can mean $60,000 to $80,000 less in home buying power. Our calculator accounts for existing debts so you can see the real impact.