How Much House Can You Afford on Your Salary?
Affordability is not just salary. It is debt load, rate environment, taxes, insurance, and how much budget flexibility you want to keep.
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The 28/36 Rule (Lender Baseline)
- 28% rule: housing costs should stay at or below 28% of gross monthly income.
- 36% rule: total monthly debt payments should stay at or below 36% of gross monthly income.
If your non-housing debt is high, the 36% side typically becomes the limiting factor even when 28% appears affordable.
Example: $80,000 Salary
Gross monthly income: $6,667. Housing cap at 28%: about $1,867. Total debt cap at 36%: about $2,400.
With $600/month in other debt, practical housing max is about $1,800/month.
Affordability by Income (Illustrative)
Assuming 6.5% rate, 30-year term, 20% down, and about $400/month taxes plus insurance:
| Annual Salary | Max Monthly Housing | Estimated Max Home Price |
|---|---|---|
| $50,000 | ~$1,167 | ~$155,000 |
| $75,000 | ~$1,750 | ~$245,000 |
| $100,000 | ~$2,333 | ~$340,000 |
| $125,000 | ~$2,917 | ~$430,000 |
| $150,000 | ~$3,500 | ~$525,000 |
These are directional estimates only. Your exact number should be modeled with your own rate, tax, insurance, debt, and down payment in the Mortgage Calculator.
What Lenders Also Evaluate
Debt-to-Income Ratio (DTI)
Many conventional programs target DTI below 43%, though some approvals extend higher. Review current obligations with the General Loan Calculator and the Auto Loan Calculator if vehicle debt is material.
Credit Score and Rate Impact
Higher credit scores usually improve rate offers. Even a 0.5% rate difference can add meaningful monthly and lifetime cost.
Down Payment Strength
Higher down payment reduces loan size, can remove PMI at 20%+, and may improve pricing.
Income Stability
Consistent employment history and documented income trends matter in underwriting decisions.
Hidden Ownership Costs Buyers Miss
- Property taxes (location-driven, often large variance)
- Homeowners insurance and possible hazard/flood add-ons
- PMI when down payment is below 20%
- Maintenance and repairs (often budgeted at 1% to 2% of value annually)
- HOA dues in many communities
- Utilities and operating costs beyond prior rental baseline
- Closing costs (typically 2% to 5% one-time)
A payment that appears affordable on principal and interest alone can become tight once full ownership costs are included.
Borrowing Capacity vs Comfort Level
Approval amount is not your target budget. Many buyers intentionally stay below the maximum to keep flexibility for savings, emergencies, and lifestyle goals.
Three Practical Approaches
- Conservative: keep housing near 25% of take-home pay.
- Lifestyle-first: set savings goals first, then allocate housing from the remainder.
- Future-proofing: pressure-test budget against likely expense growth and inflation using the Inflation Calculator.
When Renting May Be Better (For Now)
Buying may be suboptimal if you expect to move within a short window, carry expensive high-interest debt, or have not yet built adequate down payment and cash reserves.
For longer-horizon planning, compare savings trajectories with the Compound Interest Calculator while you build your home-buying fund.
Find Your Number With Real Inputs
Start with the Mortgage Calculator, then cross-check affordability assumptions in our Finance calculator library. For mortgage mechanics, read the Mortgage Calculator Guide.