Key Takeaways
- Current rates (Jan 2026): 30-year fixed at 6.15%, 15-year at 5.44%, FHA at 5.50-5.90%, VA at 5.40-5.70%
- Median home price: $415,200 — requires ~$100K-$135K income with 20% down
- Down payment reality: Median is 19% for all buyers, just 9-10% for first-time buyers
- 15-year vs 30-year: Save $235,000+ in interest by choosing 15-year, but payments are ~$650/month higher
- Extra payments work: Just $200/month extra on a $320K loan saves $86,000 and cuts 7.5 years off your mortgage
Quick Answer
On a $415,000 home with 20% down at today's 6.15% rate, your monthly payment is approximately $2,027 for principal and interest alone. Add taxes and insurance for a total of around $2,500-2,700/month. To afford this, you typically need $100,000-$125,000 annual income.
The Affordability Trap (Read This First)
Most mortgage calculators lie to you.
They show you a number based on Principal and Interest (P&I) and pretend that's your monthly payment.
It isn't.
In 2026, property taxes and insurance have skyrocketed. For many buyers, these "hidden" costs add 30% to 50% to the monthly bill.
If you budget based on P&I alone, you won't just be house poor—you might be denied the loan.
This guide does the math the banks won't do for you.
We'll break down exactly how much income you need, why the "20% down" rule is outdated, and how to use the calculator above to find your true affordability number.
Current Mortgage Rates (January 2026)
Mortgage rates directly impact how much house you can afford. Here's what you're looking at right now:
Freddie Mac PMMS
The 30-year fixed rate averaged 6.15%. The 15-year fixed averaged 5.44%. Rates have declined from year-ago levels (30-year was 6.91% in Dec 2024).
| Loan Type | Current Rate | Notes |
|---|---|---|
| 30-Year Fixed | 6.15% | Most popular option |
| 15-Year Fixed | 5.44% | Saves $235K+ in interest |
| FHA 30-Year | 5.50-5.90% | 3.5% down payment |
| VA 30-Year | 5.40-5.70% | 0% down, no PMI |
Pro Tip: Each 1% rate increase adds roughly $200/month to your payment on a $320K loan—and costs you about $75,000 more over the life of the loan. Today's 6.15% rate is significantly lower than the 6.91% from a year ago.
How Much House Can You Afford?
Lenders use the 28/36 rule to determine your maximum mortgage:
The 28/36 Rule
28% Rule: Housing costs shouldn't exceed 28% of gross monthly income.
36% Rule: Total debt payments shouldn't exceed 36% of gross monthly income.
Income Required by Home Price
| Home Price | Monthly Payment | Income Needed |
|---|---|---|
| $300,000 | ~$2,022 | $86,657 |
| $350,000 | ~$2,308 | $98,914 |
| $415,000 | ~$2,677 | $114,729 |
| $500,000 | ~$3,164 | $135,600 |
| $600,000 | ~$3,735 | $160,071 |
*Assumes 20% down, 1.2% property tax, and $1,200/yr insurance. Your actual requirement may vary.
Down Payment: How Much Do You Really Need?
The 20% down payment is a myth that keeps many people from buying sooner than they should.
Actual Down Payment Statistics (2026)
- Median all buyers: 19%
- First-time buyers: 9-10%
- Repeat buyers: 23% (using equity)
| Loan Type | Minimum Down | Key Requirements |
|---|---|---|
| Conventional | 3% | 620+ credit score, PMI required |
| FHA | 3.5% | 580+ credit score |
| VA | 0% | Military service required, no PMI |
| USDA | 0% | Rural areas, income limits |
PMI: Private Mortgage Insurance Explained
PMI protects the lender (not you) when you put less than 20% down.
What is PMI?
Private Mortgage Insurance costs between 0.46% and 1.5% of your original loan amount per year, depending on your credit score and down payment size.
| Credit Score | PMI Rate | Monthly Cost ($320K) |
|---|---|---|
| 760+ | 0.46% | $123 |
| 720-759 | 0.60% | $160 |
| 680-719 | 0.85% | $227 |
| 620-639 | 1.50% | $400 |
When PMI Ends
- At your request: Once you reach 20% equity
- Automatically: When you reach 22% equity
- FHA loans: MIP lasts for the loan's life (unless 10%+ down)
15-Year vs 30-Year Mortgage Comparison
This is one of the biggest financial decisions you'll make.
| Factor | 30-Year (6.15%) | 15-Year (5.44%) |
|---|---|---|
| Monthly P&I ($332K) | $2,023 | $2,699 |
| Total Interest | $396,280 | $153,820 |
| Interest Savings | — | $242,460 |
Which Term Should You Choose?
- Choose 15-year if → You can comfortably afford the higher payment without cutting into emergency savings or retirement contributions.
- Choose 30-year if → You need lower payments for cash flow flexibility or want to invest the difference in retirement accounts.
- Compromise option → Get a 30-year mortgage but make extra payments as if it were a 20 or 25-year loan.
Extra Payments: How to Save $100,000+ in Interest
Making extra payments is the most powerful tool you have once you're locked into a mortgage.
| Extra Payment | Years Saved | Interest Saved |
|---|---|---|
| $100/month | 4.5 years | $57,284 |
| $200/month | 7.5 years | $96,841 |
| $500/month | 13 years | $163,847 |
| Bi-weekly payments | ~5 years | ~$62,000 |
Critical: Specify "Apply to Principal"
When making extra payments, always specify that you want them applied to principal. Some lenders default to applying extra payments toward future payments (which doesn't save you interest).
Mortgage Types Compared
| Loan Type | Best For | Min. Down | Key Benefit |
|---|---|---|---|
| Conventional | Most buyers with good credit | 3% | PMI can be removed |
| FHA | First-time buyers, lower credit | 3.5% | Easier qualification |
| VA | Veterans, active military | 0% | No PMI, best rates |
| USDA | Rural buyers, income limits | 0% | No down payment |
| Jumbo | Loans over $806,500 | 10-20% | Higher loan amounts |
Frequently Asked Questions
How much income do I need for a $400,000 mortgage?
You typically need $100,000 to $135,000 annual income to afford a $400,000 home. This assumes a 20% down payment ($80,000), current rates around 6.15%, and following the 28/36 rule where housing costs stay below 28% of gross income.
What is a good mortgage rate right now?
As of January 2026, the average 30-year fixed mortgage rate is around 6.15% according to Freddie Mac, while 15-year fixed rates average 5.44%. FHA loans average around 5.50-5.90%, and VA loans are typically 5.40-5.70%. Rates below these averages are considered good.
Is it better to get a 15-year or 30-year mortgage?
A 15-year mortgage saves massive interest but has higher payments. On a $320,000 loan: 30-year at 6.15% costs $1,954/month with ~$383,000 total interest. A 15-year at 5.44% costs $2,600/month with ~$148,000 total interest—saving over $235,000. Choose 15-year if you can afford the higher payment.
What is PMI and when can I remove it?
Private Mortgage Insurance (PMI) protects lenders when you put less than 20% down. It costs 0.46% to 1.5% of your loan annually ($115-$375/month on a $300,000 loan). You can request PMI removal at 20% equity, and lenders must automatically cancel it at 22% equity.
How much can I save with extra mortgage payments?
Extra payments create dramatic savings. On a $320,000 loan at 6.15%: $100/month extra saves $51,000 and cuts 4.5 years off. $200/month extra saves $85,000 and cuts 7.5 years. Bi-weekly payments (26 half-payments = 13 full payments/year) save approximately $59,000 and cut 5 years.
Mortgage Calculator Summary
What you need to know:
A mortgage calculator estimates monthly payments by factoring in principal, interest, property taxes, insurance, and PMI. At current January 2026 rates (6.15% for 30-year fixed), a $415,000 home with 20% down costs ~$2,500-2,700/month total.
Key numbers:
- 15-year vs 30-year saves over $242,000 in interest
- $200/month extra saves ~$85,000 and cuts 7.5 years off
- 77% of buyers only get one quote—comparing 3+ lenders can save $3,000
Best practices:
- Compare at least 3 lenders
- Keep housing costs under 28% of gross income
- Consider 15-year if you can afford higher payments
- Make extra payments toward principal when possible
Next Steps
Now that you understand mortgage costs and strategies, put this knowledge to use:
Calculate Your Monthly Payment
Related Calculators
Helpful Resources
- How Amortization Works - Deep dive into the math behind amortization
- Mortgage Rates Guide - Understand what drives rates
- Mortgage Rates Today - Check current rates
- CFPB Homeownership Resources - Official consumer protection info
- Freddie Mac PMMS - Primary Mortgage Market Survey data
BONUS Strategy: The "Automated Snowball"
You saw in the tables above that $200/month extra saves you $96,000.
But most people forget to pay it.
Here is the trick:
Don't make "extra payments." Instead, set up your autopay for $200 more than your required payment the day you close.
You will get used to the higher amount immediately (lifestyle creep works both ways). You will never "miss" the money.
But you will wake up in 22 years mortgage-free, while your neighbors are still paying for another decade.
About Jon Teera
Jon Teera is the Lead Developer and Founder of CalcLogix. Unlike traditional financial writers, Jon approaches personal finance as a data engineering problem. He builds custom calculators that factor in localized variables—like tax codes and insurance rates—that standard bank tools ignore.
Read more about how we verify data →