How Much House Can I Afford? By Salary With Examples
The 28/36 rule says keep your mortgage payment under 28% of gross monthly income and total debt under 36%. On a $80,000 salary, that is a $1,867/month payment — equivalent to a roughly $310,000 loan at 7%.
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How much house you can afford by salary is governed by the 28/36 rule: your monthly mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. On an $80,000 salary, 28% of $6,667 gross monthly income = $1,867/month — which at 7% over 30 years finances approximately $282,000. With a 20% down payment, that is a $352,500 home.
How much house can I afford by salary
- Calculate 28% of gross monthly income — this is your maximum monthly mortgage payment including principal, interest, taxes, and insurance (PITI). $80,000 ÷ 12 = $6,667/mo × 0.28 = $1,867.
- Subtract estimated taxes and insurance — property taxes and insurance vary by location. Estimate $400–$600/month for taxes + insurance on a $300k–$400k home, leaving approximately $1,267–$1,467 for P&I.
- Calculate the loan amount — use a mortgage calculator with your P&I payment, rate, and term. At 7% 30-year and $1,267 P&I: approximately $190,000 loan. At $1,467: approximately $220,000 loan.
- Add your down payment — maximum home price = loan amount ÷ (1 − down payment %). At 20% down and $220,000 loan: $220,000 ÷ 0.80 = $275,000 home price.
- Apply the 36% check — add existing monthly debt payments (car loan, student loans, credit cards) to the mortgage. Total should be ≤36% of gross income.
Affordability table: salary to maximum home price
| Annual salary | Max monthly PITI (28%) | Est. P&I available | Loan amount (7%/30yr) | Max home price (20% down) |
|---|---|---|---|---|
| $50,000 | $1,167 | $667 | $100,000 | $125,000 |
| $60,000 | $1,400 | $900 | $135,000 | $169,000 |
| $75,000 | $1,750 | $1,250 | $188,000 | $235,000 |
| $100,000 | $2,333 | $1,783 | $268,000 | $335,000 |
| $125,000 | $2,917 | $2,367 | $356,000 | $445,000 |
| $150,000 | $3,500 | $2,950 | $443,000 | $554,000 |
These are maximum qualification numbers — not recommendations. Buying at 28% of gross income leaves less flexibility for savings, retirement contributions, and emergency funds. Many financial planners suggest targeting 20–25% of gross income for housing to maintain a comfortable financial cushion.
The debt factor: how other loans reduce your home budget
Every $500/month in other debt payments (car loan, student loans) reduces your qualifying mortgage by approximately $75,000–$80,000 at 7%:
| Scenario ($100k salary) | Other monthly debt | Available for mortgage (36% rule) | Max loan | Max home (20% down) |
|---|---|---|---|---|
| No other debt | $0 | $3,000 | ~$450,000 | ~$562,000 |
| Car loan $400/mo | $400 | $2,600 | ~$390,000 | ~$487,000 |
| Car + student loan $800/mo | $800 | $2,200 | ~$330,000 | ~$412,000 |
| High debt load $1,200/mo | $1,200 | $1,800 | ~$270,000 | ~$337,000 |
A $400/month car loan reduces your maximum home purchase by $75,000. This is why paying off the car loan before applying for a mortgage meaningfully increases your buying power — and why carrying a lease or loan on an expensive vehicle significantly constrains your home budget.
Down payment size: how it changes the calculation
A larger down payment reduces the required loan amount and monthly payment, allowing you to afford a higher-priced home on the same income:
- 3% FHA down on $100k salary: loan can be higher at the same monthly payment, but FHA MIP adds back cost. Net effect: slightly lower purchase price vs 10% conventional due to mortgage insurance.
- 10% down: adds PMI cost ($100–$200/month), reducing the P&I available for the loan vs 20% down.
- 20% down: no PMI, maximum purchasing power per dollar of income.
- 25%+ down: typically qualifies for reduced PMI rates even before hitting 20% equity — lenders view this as lower risk.
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Authoritative sources
- Consumer Financial Protection Bureau — How Much Can I Borrow to Buy a Home? — CFPB guidance on the DTI ratios lenders use, how lenders calculate qualifying income, and factors beyond the 28/36 rule that affect loan approval.
- Fannie Mae — Home Purchase FAQs — Fannie Mae's guidance on conventional loan qualifying requirements, including the DTI limits and documentation requirements that underwriters use for conventional mortgages.
Key takeaways
- The 28/36 rule: mortgage payment (PITI) ≤ 28% of gross monthly income; total debt ≤ 36%. On an $80,000 salary, this allows roughly $1,867/month for housing — about a $310,000 loan at 7%, or $388,000 home with 20% down.
- Property taxes, insurance, HOA fees, and PMI reduce the loan amount you can afford at any given payment. High-tax states can reduce your buying power by $50,000–$100,000 compared to low-tax states at the same income.
- Every $500/month in other debt reduces your maximum home purchase by approximately $75,000–$80,000. Paying off car loans before applying for a mortgage materially increases buying power.
- Maximum qualification is not the same as maximum comfort. Financial planners often recommend targeting 20–25% of gross income for housing, not the 28% maximum, to preserve room for savings, retirement, and unexpected expenses.
- Down payment size directly affects total monthly cost through PMI: 10% down adds $100–$200/month in PMI that reduces effective buying power compared to 20% down.
- Credit score affects both qualifying eligibility and rate, which changes affordability. Improving your score to 760+ before applying can unlock a lower rate that meaningfully increases the loan amount you qualify for at the same monthly payment.
Frequently asked questions
What is the 28/36 rule for buying a house?
The 28/36 rule says your mortgage payment (including taxes and insurance) should not exceed 28% of gross monthly income, and your total debt payments (mortgage + car loans + student loans + credit cards) should not exceed 36%. These are lender guidelines that determine how much mortgage you can qualify for, not just personal budgeting benchmarks.
How much house can I afford on a $70,000 salary?
At $70,000/year ($5,833/month), the 28% rule allows a $1,633 mortgage payment. At 7% on a 30-year loan, this finances approximately $246,000. With a 20% down payment, total home price is ~$307,500. At 3.5% FHA down payment, the loan would be about $236,000 on a $244,000 home. Other debts reduce the affordable loan amount.
How much do I need to make to afford a $400,000 house?
At 7% interest on a 30-year mortgage with 20% down, a $320,000 loan has a principal and interest payment of approximately $2,130/month. Adding taxes ($400/mo) and insurance ($150/mo) totals ~$2,680/month. The 28% rule requires gross income of $9,571/month or $114,857/year. With other debts, the required income would be higher.
What is the maximum home price for my income?
A rule of thumb: home price of 3–5× your annual gross income. On $80,000: $240,000–$400,000 range. The right multiple depends on down payment, interest rate, other debt, and local property taxes. At 7% rates, the multiple is closer to 3–3.5×; at 3% rates, it could stretch to 4–5×. Use the 28% mortgage payment rule as the binding constraint rather than a simple income multiple.
What else affects how much house I can afford beyond salary?
Five major factors: (1) Down payment size — larger down = lower loan = lower payment. (2) Interest rate — a 1% rate increase reduces buying power by ~10%. (3) Other monthly debt — every $500/month in other debt reduces the affordable mortgage by roughly $75,000–$80,000. (4) Property tax rate — ranges from 0.28% (Hawaii) to 2.47% (New Jersey) of home value annually. (5) Credit score — affects both qualifying rate and rate offered.
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