How Much House Can I Afford?
The honest answer to “how much house can I afford” is not a single number — it is a monthly payment you can carry comfortably, worked backwards into a home price. Start with your income, subtract your other debts, apply the lender rules, and only then look at listings. This page walks through that chain with real numbers, and the mortgage calculator above lets you test any price against your own income.
Take the default example: a $350,000 home, $70,000 down, a $280,000 loan at 6.5% for 30 years, with $3,500 a year of tax and $1,500 a year of insurance. The total payment is $2,186 a month. The classic 28% rule says that payment fits a gross income of about $93,698 a year. If you earn less than that, the same house is a stretch — and the calculator shows you exactly how much cheaper the house, or how much bigger the down payment, needs to be.
The 28/36 Rule, Explained
Lenders use two ratios. The front-end ratio says housing costs — principal, interest, tax, insurance, PMI, and HOA — should stay under 28% of gross monthly income. The back-end ratio says housing plus all other debts (car loans, student loans, credit cards, child support) should stay under 36%. A borrower earning $7,808 a month gross ($93,698 a year) passes the front-end test on a $2,186 payment, since $2,186 is exactly 28% of $7,808. But if that borrower also pays $400 a month on a car loan and $250 on student loans, total debts reach $2,836, or 36.3% — just over the back-end limit — and the lender may approve a smaller loan.
These are guidelines, not laws. Some loan programs allow back-end ratios up to 43% or even 50% with strong credit and reserves, but a higher approval is not the same as a comfortable payment. The number that matters at the end of the month is the cash left after every bill, not the maximum the lender will allow. The salary calculator converts any hourly wage into annual and monthly pay so you can run these ratios on your own numbers.
From Income to Home Price
Work backwards in four steps. First, take gross monthly income — annual pay divided by 12. Second, multiply by 0.28 to get the maximum housing payment. Third, subtract monthly tax, insurance, PMI, and HOA to leave the principal-and-interest budget. Fourth, convert that budget into a loan with the payment formula, then add the down payment to get the price. The table below does this for three incomes at 6.5% and 30 years, assuming $300 a month of tax and $125 a month of insurance and no PMI or HOA.
| Gross income | Max housing (28%) | P&I budget | Max loan | Max price (20% down) |
|---|---|---|---|---|
| $60,000 / yr | $1,400 / mo | $975 / mo | $154,000 | $192,500 |
| $93,698 / yr | $2,186 / mo | $1,761 / mo | $279,000 | $348,750 |
| $120,000 / yr | $2,800 / mo | $2,375 / mo | $377,000 | $471,250 |
| $150,000 / yr | $3,500 / mo | $3,075 / mo | $488,000 | $610,000 |
Notice how sensitive the answer is to the rate: at 5.5% instead of 6.5%, the same $1,761 a month of principal and interest supports a loan of about $310,000 instead of $279,000. That is why rate shopping matters as much as price shopping. The tax calculator can also show what your income looks like after federal tax, which is the figure your monthly budget actually runs on.
Down Payment: How Much Do You Need?
The down payment is the second-biggest lever after income. Twenty percent is the traditional target because it avoids PMI, but it is not a requirement — many first-time buyers put down 3% to 10%. The trade-off is real: on a $350,000 home, 10% down leaves a $315,000 loan and adds about $197 a month of PMI, while 20% down leaves a $280,000 loan with no PMI at all. The table below compares the options on the same home at 6.5% for 30 years.
| Down payment | Loan | P&I per month | PMI per month | Total P&I + PMI |
|---|---|---|---|---|
| 3% — $10,500 | $339,500 | $2,139 | $212 | $2,351 |
| 10% — $35,000 | $315,000 | $1,984 | $197 | $2,181 |
| 20% — $70,000 | $280,000 | $1,770 | $0 | $1,770 |
| 30% — $105,000 | $245,000 | $1,549 | $0 | $1,549 |
A bigger down payment also means more cash tied up in the house and less left for emergencies, moving costs, and repairs. A common mistake is emptying savings to reach 20% and then having nothing left when the roof leaks in month three. Keep 3 to 6 months of payments in reserve after closing, even if that means a smaller down payment and a few years of PMI. PMI normally ends once the balance reaches 80% of the home value, so it is a temporary cost, not a permanent one.
Debts, Credit, and the Rest of the Picture
Income alone does not decide affordability. Lenders weigh the full picture, and so should you.
- Other debts. Every monthly debt payment reduces the mortgage you can carry under the 36% rule. Paying off a $400 car loan frees roughly $70,000 of borrowing power at 6.5%.
- Credit score. A score above 740 usually earns the best rates; below 620, options narrow sharply and rates rise. A 1% higher rate on a $280,000 loan adds about $189 a month.
- Job stability. Lenders want two years of steady income history, and a job change mid-application can delay approval.
- Closing costs. Budget 2% to 5% of the price for fees, prepaid tax and insurance, and title charges — $7,000 to $17,500 on a $350,000 home.
- Maintenance. Owners typically spend 1% to 2% of the home value per year on upkeep — $3,500 to $7,000 a year on a $350,000 home.
- Future plans. A payment that fits today may not fit after a child, a career change, or a move. Buy for the life you expect in five years, not just the one you have now.
The mortgage payment calculator at the top of this page includes fields for tax, insurance, HOA, and extra payments, so you can test the full monthly cost — not just the loan — against your budget before you make an offer.
Renting vs Buying Check
Affordability is not only about whether you can buy — it is about whether buying beats renting for you. A $2,186 mortgage payment looks close to a $2,000 rent, but the owner also pays maintenance, higher insurance, and closing costs, while the renter keeps flexibility and avoids repair bills. On the other side, the owner’s principal payments build equity: in year one of the default loan only $3,130 of the $26,232 paid goes to principal, but by year fifteen the split has flipped and most of each payment builds equity. The Consumer Financial Protection Bureau publishes home-buying guides that walk through this comparison without selling anything.
| Cost | Renting ($2,000/mo) | Owning ($2,186/mo) |
|---|---|---|
| Monthly cash out | $2,000 | $2,186 + ~$290 maintenance |
| Equity built, year 1 | $0 | $3,130 |
| Repair risk | Landlord’s problem | Yours — budget 1–2% of value/yr |
| Flexibility | Move in a year | Selling costs 6–10% of price |
| Tax angle | None | Mortgage interest may be deductible |
Common Mistakes
Most wrong mortgage numbers come from the same short list of errors. Check yours against it before trusting the result.
- Forgetting taxes and insurance. Principal and interest alone can understate the real monthly bill by $400 or more.
- Ignoring PMI. A down payment under 20% usually adds private mortgage insurance until the balance reaches 80% of the home value.
- Using the list price as the loan. The loan is the price minus the down payment — a $350,000 home with $70,000 down is a $280,000 loan.
- Comparing only the monthly payment. A 30-year loan looks cheaper per month but can cost $198,086 more in interest than a 15-year loan on the same balance.
- Forgetting HOA dues. Some homes carry $200 to $500 a month in association dues on top of PITI.
- Using a rate you cannot get. Advertised rates assume excellent credit; your actual rate depends on your credit score, down payment, and loan type.
Related Tools
Related tools on this site: the main mortgage calculator for a quick check, the salary calculator to test the payment against your income, the tax calculator to see the tax side of homeownership, and the compound interest calculator to compare saving for a down payment against investing.
Key Takeaways
If you remember nothing else from this page, remember these five points.
- The monthly payment is PITI — principal, interest, tax, and insurance — not just the loan. On the $350,000 example, PITI is $2,186 against $1,770 of principal and interest alone.
- The loan is the price minus the down payment: $350,000 minus $70,000 is a $280,000 loan.
- Twenty percent down avoids PMI; under 20%, PMI adds roughly $175 a month on a $280,000 loan.
- A 15-year term saves $198,086 of interest on the default loan but costs $669 more a month.
- The 28% rule: housing should stay under 28% of gross monthly income — a $2,186 payment fits about $93,698 a year.
Try It Yourself
- Enter your home price and down payment in the calculator above.
- Add your real annual tax and insurance figures, not guesses.
- Compare the 15-year and 30-year totals in the comparison table.
- Check the payment against your monthly income using the 28% rule.
Quick Reminders
- Always compare the full monthly total, including escrow — never principal and interest alone.
- Get a real insurance quote before relying on the total.
- Keep 3 to 6 months of payments in reserve after closing.
- Shop at least three lenders — a 0.5% lower rate saves about $91 a month on a $280,000 loan.
Run your own numbers in the calculator at the top of the page, and confirm the final figures with your lender before making an offer.
Frequently Asked Questions
How much house can I afford on $100,000 a year?
At $100,000 gross, 28% of monthly income is $2,333 for housing. After about $425 a month of tax and insurance, roughly $1,908 is left for principal and interest, which supports a loan near $303,000 at 6.5% for 30 years — about a $379,000 home with 20% down. Other debts and your credit score can move this up or down.
What is the 28/36 rule?
The front-end ratio caps housing costs at 28% of gross monthly income; the back-end ratio caps housing plus all other debts at 36%. Lenders use these as guidelines when deciding how much to lend, and they are a good sanity check for your own budget too.
How much house can I afford on $60,000 a year?
At $60,000 gross, 28% is $1,400 a month for housing. After tax and insurance of roughly $425 a month, about $975 is left for principal and interest, supporting a loan near $154,000 at 6.5% for 30 years — around a $192,500 home with 20% down. A lower rate or a bigger down payment raises the ceiling.
Is 20% down required to buy a house?
No. Many loans allow 3% to 10% down, especially for first-time buyers. The cost of a smaller down payment is a bigger loan and PMI until the balance reaches 80% of the home value. On a $350,000 home, 10% down instead of 20% adds about $411 a month ($214 more P&I plus $197 PMI).
Does my credit score change how much house I can afford?
Yes, through the rate. A 1% higher rate on a $280,000, 30-year loan adds about $189 a month, which under the 28% rule means needing about $8,100 more annual income for the same house. Improving your score before applying is often the cheapest way to afford more house.
Should I buy the most expensive house I can afford?
Usually not. The maximum the lender allows leaves no room for repairs, job changes, or life changes. Most buyers are happier buying somewhat below their maximum, keeping the payment near 25% of take-home pay rather than 28% of gross pay.
How much house can I afford on $80,000 a year?
At $80,000 gross, 28% of monthly income is $1,867 for housing. After about $425 a month of tax and insurance, roughly $1,442 is left for principal and interest, supporting a loan near $229,000 at 6.5% for 30 years — about a $286,000 home with 20% down.
Does the 28% rule use gross or net income?
Gross income — pay before taxes and deductions. Lenders use gross income for the 28/36 ratios. For your own budget, though, test the payment against take-home pay as well, since that is the money that actually reaches your bank account.
Disclaimer: This calculator gives estimates only and is not financial advice. Mortgage rates, taxes, insurance, and lender rules vary by location and credit profile. Confirm every figure with your lender before making a decision.