A homebuyer’s real budget is not the mortgage payment. It is the mortgage payment plus taxes, insurance, HOA dues, mortgage insurance, maintenance and cash reserves.
That distinction matters more in 2026 because many buyers are already stretched. Zillow reported that the typical U.S. home value was $368,720 in May and that the typical monthly mortgage payment was $1,861, assuming 20% down and excluding taxes and insurance.
The words “excluding taxes and insurance” are critical. In many markets, those costs can change the affordability picture completely.
Key takeaways
- Buyers should calculate total monthly housing cost, not just principal and interest.
- Zillow’s typical mortgage payment estimate excludes taxes and insurance.
- NAR’s March 2026 Housing Affordability Index stood at 113.7.
- NAR said the index fell to 109.0 when homeowners insurance costs were included.
- Treasury/FIO found homeowners insurance premiums rose 8.7% faster than inflation from 2018 to 2022.
- Buyers should get insurance quotes before making final affordability decisions.
What most mortgage calculators miss
A basic mortgage calculator usually starts with home price, down payment, interest rate and loan term. That produces a principal-and-interest payment.
But buyers also need to estimate property taxes, homeowners insurance, flood insurance where needed, HOA or condo dues, private mortgage insurance, utilities, maintenance, repairs and emergency reserves.
A buyer who can afford the principal-and-interest payment may still struggle once the full housing cost is included.
Insurance can change affordability
NAR’s insurance-adjusted affordability analysis shows how much insurance can affect the picture. NAR said the standard Housing Affordability Index stood at 113.7 in March 2026, meaning the typical family earned about 14% more than needed to qualify for a median-priced home under the standard measure. But when homeowners insurance costs were included, the index fell to 109.0.
That does not mean every buyer is priced out by insurance. It means traditional affordability measures can understate the real burden.
Treasury and the Federal Insurance Office found that average homeowners insurance premiums per policy increased 8.7% faster than inflation from 2018 to 2022. They also found that consumers in the 20% of ZIP codes with the highest expected climate-related building losses paid average premiums of $2,321, or 82% more than those in the lowest-risk ZIP codes.
Taxes matter too
Property taxes can vary dramatically by state, county and city. They can also change after purchase.
A buyer should not rely only on the seller’s current tax bill. In some places, assessed value may reset after sale. In others, exemptions, caps or local rules may affect what the buyer actually pays.
The safer approach is to ask a lender, agent, tax assessor or closing professional how taxes are likely to be calculated after the purchase.
Build a full monthly budget
Before deciding how much house to buy, buyers should build a full monthly budget.
| Cost | Why it matters |
|---|---|
| Principal and interest | Core mortgage payment |
| Property taxes | Can change after purchase |
| Homeowners insurance | Varies by property and risk |
| Flood insurance | Separate from standard homeowners insurance |
| PMI or mortgage insurance | May apply with lower down payments |
| HOA or condo dues | Adds to monthly housing cost |
| Utilities | Can vary by home size and age |
| Maintenance reserve | Helps cover repairs |
| Emergency savings | Protects against income or repair shocks |
This budget should be based on real quotes and local estimates, not national averages.
What this means
For buyers, the best affordability question is not “what will the bank approve?” It is “what monthly payment remains safe after all housing costs are included?”
Buyers should get insurance quotes early, estimate taxes carefully and leave cash reserves after closing. A home that looks affordable before taxes and insurance may be too expensive after the full cost is included.
FAQ
How much house can I afford after taxes and insurance?
It depends on income, debts, mortgage rate, down payment, property taxes, insurance, HOA dues and reserves. Buyers should calculate total monthly cost, not just mortgage principal and interest.
Do mortgage calculators include taxes and insurance?
Some do, but not all. Zillow’s typical mortgage payment figure cited in its May report excluded taxes and insurance.
Why does homeowners insurance affect affordability?
Insurance is part of the monthly cost of owning a home. Higher premiums can reduce how much house a buyer can comfortably afford.
Should I get an insurance quote before making an offer?
Yes. Buyers should estimate insurance early, especially in markets where coverage is expensive or difficult to obtain.
Can property taxes increase after I buy?
Yes, depending on local rules. Buyers should ask how taxes may be reassessed after purchase.
Sources
- Zillow May 2026 Market Report
- NAR Insurance-Adjusted Housing Affordability Index
- U.S. Treasury/FIO Homeowners Insurance Costs Report Release
- Realtor.com Down Payment Report May 2026