Originally published on HAR by Michael Gee with updated Houston insights. Read the full HAR version here.
How Much Home Can I Afford in Houston Texas Right Now
Figuring out how much home you can afford in Houston is the single most important step in your home search. Whether you are a first time buyer just getting started, a veteran using a VA loan, or a real estate investor analyzing returns, your budget shapes every decision. Houston continues to rank as one of the most affordable major metros in the United States. This guide walks you through exactly how to calculate your buying power in the Houston housing market today.
What Goes Into Calculating Your Home Budget
Lenders evaluate a few key factors when determining how much you can borrow. These include your gross monthly income, existing monthly debts, credit score, and available down payment. Most lenders follow the 28/36 rule, which means your housing costs should stay under 28 percent of your gross income, and your total debts should remain below 36 percent.
Here is how that works in practice. The median household income in Houston is approximately $64,361 per year, or about $5,363 per month. At the 28 percent threshold, that supports a maximum monthly housing payment of roughly $1,502. When you factor in current interest rates and property taxes, that translates to a purchase price in the $250,000 to $300,000 range for many Houston buyers.
Where the Houston Housing Market Stands Today
The Houston real estate market heading into 2026 is offering buyers something they have not had in years: breathing room. The January 2026 HAR market report shows the median single family home price at $334,990 and the average at $426,558. Homes are sitting on the market for an average of 64 days, the longest stretch since early 2020.
Inventory continues to climb. More than 34,500 homes are actively listed across the Greater Houston area, a nearly 17 percent jump from a year ago. At 4.7 months of supply, the market is approaching true balance between buyers and sellers. Buyers now have more time, more choices, and stronger negotiating positions.
Monthly affordability has also improved. A typical Houston homebuyer’s monthly payment in January 2026 was approximately $1,561, down from $1,723 a year earlier. That is a meaningful reduction that puts more homes within reach for Houston families.
The Impact of Mortgage Rates on What You Can Buy
Interest rates are the single biggest variable in your home affordability equation. As of February 2026, the average 30 year fixed rate for a conventional mortgage is about 6 percent. VA loan rates are lower, averaging between 5.38 and 5.60 percent. FHA rates hover near 5.87 percent.
Even a small difference in rates changes your buying power dramatically. At 6 percent on a $300,000 loan, your monthly principal and interest is about $1,799. At 5.5 percent, that drops to approximately $1,703. Over 30 years, that saves you over $34,000. Choosing the right loan program and comparing lenders can put you in a significantly better position when shopping for Houston homes.
Why VA Loans Are a Game Changer in Houston
Veterans and active duty military families have access to one of the most powerful home buying tools available. The 2026 VA loan limit in Harris County and across Texas is $832,750. With full entitlement, that entire amount can be financed with zero money down.
VA loans offer lower interest rates than conventional and FHA options. There is no requirement for private mortgage insurance. The VA also allows a debt to income ratio of up to 41 percent, giving borrowers more flexibility than the standard 36 percent guideline. Most Houston lenders accept credit scores as low as 580 to 620 for VA applicants.
For a Houston military family earning $75,000 annually, a VA loan at today’s rates can support a purchase price north of $400,000 with nothing down. That unlocks popular family friendly communities in Katy, Cypress, Pearland, and League City where new construction options with builder incentives are available.
What Houston Homes Cost by Neighborhood
Houston’s real estate market offers something at nearly every price point. Here is a snapshot of what buyers can expect across popular areas.
Below $250,000. Spring Branch is a standout with a median purchase price near $215,000. Areas like Aldine, portions of northeast Houston, and the Gulf Freeway corridor also offer affordable entry points for first time buyers and investors.
$250,000 to $400,000. This range covers a large share of the Houston housing market. Katy, Cypress, Tomball, and Magnolia all offer strong value in this bracket with master planned communities, quality schools, and new construction homes. Sugar Land also sits in this range at about $337,600.
$400,000 to $650,000. Buyers in this tier gain access to established neighborhoods closer to the Houston core. Meyerland offers a median around $504,000, and Garden Oaks and select blocks in the Heights also fall here. These neighborhoods provide walkability and proximity to downtown.
Above $650,000. The luxury segment in Houston is thriving. Sales of homes over $1 million rose 15.5 percent year over year in January 2026. River Oaks, Memorial, West University Place, and Tanglewood lead this segment.
How to Calculate Your Home Buying Budget Step by Step
Follow these steps to determine what you can realistically afford in Houston.
- Start with your gross monthly household income.
- Multiply by 0.28 to find your maximum housing payment.
- Subtract estimated property taxes. Harris County combined rates run approximately 2 to 2.5 percent of assessed value annually. Homeowners insurance in Houston typically ranges from $2,000 to $4,000 per year.
- Use the remainder for your mortgage payment. Run it through a mortgage calculator with current rates to find your maximum loan amount.
- Add your down payment. Conventional loans require 3 to 20 percent. FHA loans require 3.5 percent. VA loans require nothing down.
- Get pre approved with a Houston lender before you start your search.
Take the Next Step
You now have the framework to understand what you can afford in Houston. The next move is matching your budget to the right home in the right neighborhood.
Search Houston homes on Michael Gee’s website to explore listings across every price point and neighborhood. Register for listing alerts so you never miss a new property that fits your budget. Or reach out directly to work with Michael Gee and get expert guidance through every step of the Houston home buying process.
