Buying a home in 2026 is not just a question of what a lender will approve.
The better question is what a buyer can comfortably afford after the mortgage payment, taxes, insurance, HOA dues, repairs, utilities and moving costs are all included. National affordability has improved from recent lows, but the market is still difficult for many buyers because home prices remain high and mortgage rates are still above the ultra-low levels that shaped the previous housing cycle.
For buyers, the 2026 affordability calculation should start with the monthly payment — but it should not end there.
Key takeaways
- NAR’s March 2026 Housing Affordability Index stood at 113.7, indicating affordability improved from recent lows.
- Zillow reported a typical U.S. home value of $368,720 in May 2026.
- Zillow estimated the typical monthly mortgage payment at $1,861, assuming 20% down and excluding taxes and insurance.
- Realtor.com reported that the median down payment fell to $23,400, or 12.8% of the purchase price, in Q1 2026.
- Realtor.com said the median down payment was down 19% year over year.
- NAR reported that 71% of metro markets had price increases in Q1 2026.
- The biggest affordability mistake is relying only on the mortgage payment and ignoring the full cost of ownership.
The national affordability snapshot
National housing affordability has improved from the most strained periods of the recent market, but affordability is still tight.
NAR’s March 2026 Housing Affordability Index stood at 113.7. In general, an index above 100 suggests the median-income household has enough income to qualify for a median-priced existing home under the index’s assumptions. But that does not mean buying feels easy. It also does not mean every region, city or price tier is affordable.
Zillow’s May 2026 market report put the typical U.S. home value at $368,720. Zillow also estimated the typical monthly mortgage payment at $1,861, assuming 20% down and excluding taxes and insurance.
That last phrase matters: excluding taxes and insurance.
For many buyers, the real monthly housing cost can be much higher than the mortgage principal-and-interest payment. Property taxes, homeowners insurance, mortgage insurance, HOA dues and maintenance can change the budget quickly.
What your monthly payment does not include
A buyer who asks, “How much house can I afford?” often starts with a mortgage calculator. That is useful, but incomplete.
A realistic monthly housing budget should include:
- principal and interest,
- property taxes,
- homeowners insurance,
- flood or hazard coverage where required,
- HOA or condo dues,
- private mortgage insurance if applicable,
- utilities,
- routine maintenance,
- emergency repairs,
- and savings after closing.
That is why two homes with the same purchase price can have very different affordability profiles. A lower-priced home with higher taxes, higher insurance and major repair needs may be less affordable than a higher-priced home with lower carrying costs.
Down payments are falling, but cash still matters
Realtor.com reported that the median down payment fell to $23,400 in Q1 2026, equal to 12.8% of the purchase price. The report also said the median down payment was down 19% from a year earlier.
That does not mean buyers no longer need cash. A lower down payment may help more buyers get into the market, but buyers still need to plan for closing costs, inspections, appraisal expenses, moving costs, reserves and early home repairs.
A lower down payment can also affect the monthly payment. Depending on the loan type, it may mean mortgage insurance, a higher loan balance or different underwriting requirements.
The practical takeaway: 20% down is not always required, but the cash needed to buy a home is larger than the down payment alone.
What a lender approves vs. what fits your life
There are three different affordability numbers buyers should understand.
The first is what a lender may approve. That number is based on income, debts, credit, assets, loan type and underwriting rules.
The second is what fits the buyer’s actual monthly budget. This should include non-housing expenses such as transportation, childcare, medical costs, student loans, retirement contributions, travel, savings and emergency reserves.
The third is what still feels comfortable after unexpected costs. Homeownership includes repairs and maintenance. A buyer who spends every available dollar on the purchase may have trouble handling the first roof issue, appliance failure or insurance increase.
A lender approval is not the same thing as a safe personal budget.
Why metro differences matter
National affordability data is useful, but real estate is still local.
NAR reported that 71% of metro markets saw price increases in Q1 2026. That means many buyers are still facing rising prices even though the national market has more inventory and more negotiation in some areas. For broader context, see our U.S. housing market update.
Affordability can vary dramatically by region, city and property type. Some Midwest and smaller-market metros may offer more room for buyers because home prices are lower. Some coastal and high-income metros may remain difficult even for households with above-average earnings. Some Sun Belt markets may offer more inventory and more seller flexibility, but buyers still need to account for taxes, insurance and commute costs.
A buyer should compare national trends with local data on median prices, days on market, price reductions, inventory and rental alternatives.
A practical 2026 affordability worksheet
Before shopping seriously, buyers should build a simple worksheet.
| Budget item | What to estimate |
|---|---|
| Target purchase price | Based on local listings and recent comparable sales |
| Down payment | Cash available without draining emergency reserves |
| Mortgage principal and interest | Based on current rate quote and loan amount |
| Property taxes | Based on local tax rates and reassessment rules |
| Insurance | Based on quotes, not assumptions |
| HOA or condo dues | Include current dues and possible increases |
| PMI or mortgage insurance | Ask lender whether it applies |
| Maintenance reserve | Set aside a monthly amount for repairs |
| Closing costs | Estimate before making an offer |
| Post-closing cash | Keep reserves after the purchase |
The worksheet should be updated after a buyer receives an actual loan estimate and insurance quote.
What this means for buyers
For buyers, 2026 may offer more options than the tightest years of the housing market, but the affordability test is still strict.
More inventory can help. Lower down payments can help. Seller concessions can help. But none of those eliminate the need to understand the full monthly cost.
A buyer who focuses only on list price may overpay. A buyer who focuses only on the mortgage rate may miss hidden carrying costs. A buyer who focuses only on the monthly payment may overlook long-term repairs or resale risks.
The best approach is to compare homes based on total ownership cost, not just the price on the listing page.
What this means for sellers
Affordability also matters to sellers.
When buyers are stretched, pricing errors are more costly. A home that looks overpriced relative to local income, payment levels or competing inventory may sit longer. Sellers should also understand that credits, repairs or rate buydown assistance may matter more to some buyers than a small list-price adjustment.
That does not mean sellers should automatically cut price. It means sellers should understand buyer payment pressure before deciding how to negotiate.
Frequently asked questions
How much income do I need to buy a home in 2026?
It depends on the home price, mortgage rate, down payment, taxes, insurance, debts and loan type. A buyer should ask a lender for a preapproval and then build a separate personal budget that includes all monthly costs.
Is 20% down still necessary?
No, 20% down is not always required. Many buyers use lower down-payment loan programs. However, a smaller down payment can affect the monthly payment, mortgage insurance and cash reserves after closing.
How much should I budget for taxes and insurance?
The amount varies widely by state, county, property type and risk profile. Buyers should use actual tax estimates and insurance quotes rather than relying only on national averages.
What credit score do I need to get a mortgage?
Credit-score requirements vary by loan type and lender. A higher credit score may help a borrower qualify for better terms, but buyers should ask lenders about specific program requirements.
Is buying more affordable than renting right now?
It depends on the local market, rent level, home price, mortgage rate, taxes, insurance, expected time in the home and maintenance costs. In some markets, renting may still be cheaper monthly. In others, buying may make sense for buyers with stable income and a longer time horizon.