By the CalcLedger editorial team · Updated September 2026 · Examples use illustrative rates · How we calculate
Online answers to "how much house can I afford" range from "three times your salary" to "whatever the bank approves." Neither is very useful. Lenders don't approve a home price — they approve a monthly payment, and they size it against your gross income and your existing debts. Once you know that payment limit, the home price falls out of simple math.
The 28/36 rule, in plain English
The most common starting point in U.S. mortgage lending is the 28/36 guideline:
- 28% (front-end ratio): your total housing payment — principal, interest, property taxes, homeowners insurance, and any HOA or mortgage insurance — should stay at or below 28% of your gross monthly income.
- 36% (back-end ratio): your housing payment plus every other monthly debt payment (car loan, student loans, credit card minimums, personal loans) should stay at or below 36% of gross monthly income.
Whichever limit is lower is the one that caps your budget. Many loan programs will stretch past these numbers — FHA and some conventional loans can approve debt-to-income ratios in the 40s — but "approved" and "comfortable" are not the same thing. The 28/36 rule is a good definition of comfortable.
How much house you can afford by salary
The table below applies the 28% limit with these assumptions: 20% down payment, a 30-year fixed rate of 6.5%, property tax of 1.1% of the home price per year, $1,500 a year for homeowners insurance, and no HOA or other debts.
| Annual salary | Max housing payment (28%) | Approx. home price | Down payment (20%) |
|---|---|---|---|
| $50,000 | $1,167/mo | $174,000 | $35,000 |
| $60,000 | $1,400/mo | $213,000 | $43,000 |
| $75,000 | $1,750/mo | $272,000 | $54,000 |
| $100,000 | $2,333/mo | $370,000 | $74,000 |
| $125,000 | $2,917/mo | $467,000 | $93,000 |
| $150,000 | $3,500/mo | $565,000 | $113,000 |
A rough takeaway: at today's rate levels, a comfortable purchase price lands around 3.5 to 3.8 times gross income — noticeably lower than the "4 to 5 times" rules of thumb that circulated when mortgage rates were near 3%.
Comfortable home price by salary
20% down, 6.5% rate, 28% of gross income for housing
Worked example: $75,000 a year
Gross monthly income is $75,000 ÷ 12 = $6,250.
- Front-end limit: 28% × $6,250 = $1,750 for total housing.
- Back-end limit: 36% × $6,250 = $2,250 for housing plus all other debts.
With no other debts, the $1,750 front-end number is the binding one. On a $272,000 home, that breaks down to roughly $1,376 principal and interest on a $218,000 loan, $249 in property tax, and $125 in insurance.
Now add a $450 car payment and $250 in student loans — $700 of other debt. The back-end limit leaves only $2,250 − $700 = $1,550 for housing. That drops the affordable price to about $239,000. Same salary, $33,000 less house. This is why paying off a car loan before applying often does more for your budget than a raise.
Three things that move your number more than salary
1. The interest rate. At 7.5% instead of 6.5%, the same $75,000 earner's affordable price falls from about $272,000 to about $250,000. Every percentage point costs roughly 8% of buying power. Shopping at least three lenders and improving your credit score before applying are the two cheapest ways to protect it.
2. Property taxes and insurance. These are part of the 28%, and they vary enormously. A 2.2% property-tax rate (common in parts of Texas, Illinois, and New Jersey) instead of 1.1% cuts the $75,000 buyer's budget by tens of thousands of dollars. Homeowners insurance in coastal and wildfire-prone states can run several times the national average. Always price these for the specific county, not a national figure.
3. Your down payment. Putting down less than 20% on a conventional loan usually adds private mortgage insurance (PMI), which counts toward your housing payment and shrinks the price you can afford. Our guide to PMI explains how much it costs and how to get rid of it.
What lenders check beyond the ratios
- Credit score: it sets your rate, and conventional loans generally need at least 620.
- Cash reserves: some lenders want a few months of mortgage payments left in the bank after closing.
- Closing costs: plan for roughly 2% to 5% of the loan amount on top of the down payment.
- Employment history: two years of steady income is the usual standard, especially for self-employed borrowers.
Run your own numbers
The table is a starting point. Enter your income and debts in the home affordability calculator for your own number, or plug your actual price, local tax rate, insurance quote, and HOA dues into the mortgage calculator and compare the total monthly payment with 28% of your gross income. If it fits under both the 28% and 36% limits and still leaves room in your real monthly budget, you've found a price you can live with, not just one you can get approved for.