Here’s the uncomfortable truth about buying a house: the number a lender approves you for and the number you can actually afford are often two very different things.
Lenders run formulas. They don’t know your childcare bill or your car that needs replacing. So before you fall in love with a listing, let’s do the real math together.
Grab your salary number. I’ll show you exactly how to figure out your price range — and then you can plug it into our free mortgage calculator to see what the monthly payment looks like.
Almost every lender in the US uses some version of the 28/36 rule. It’s simple:
Note: that’s gross income — pay before taxes, not your take-home. One more reason not to max this out.
Say your household earns $90,000 a year. Here’s the math, step by step:
Step 1: Monthly gross income
$90,000 ÷ 12 = $7,500/month
Step 2: Housing budget (28% rule)
$7,500 × 0.28 = $2,100/month
That’s your ceiling for PITI — the full housing payment, not just principal and interest.
Step 3: Total debt ceiling (36% rule)
$7,500 × 0.36 = $2,700/month
Now subtract your other monthly debts. Say you have a $500 car payment and $200 in student loans:
$2,700 − $700 = $2,000/month available for housing.
Here’s the key part people miss: you take the LOWER of the two numbers. The 28% rule gives you $2,100. The 36% rule gives you $2,000. Your real budget is $2,000/month.
Step 4: Turn that into a home price
At roughly a 6.8% rate on a 30-year fixed loan with 20% down, a $320,000 home works out like this:
That fits just under the $2,000–$2,100 budget. So on a $90K salary with $700 in other debts, you’re looking at roughly a $300K–$330K home — not the $400K+ a lender might approve you for.
Want to check your own numbers? Our mortgage calculator lets you punch in any home price, rate, and down payment to see the true monthly cost.
Quick reference (30-year fixed, ~6.5–7% rate, 20% down, modest taxes/insurance):
| Salary | Monthly housing budget (28%) | Rough home price range |
|---|---|---|
| $60,000 | $1,400 | $190K–$230K |
| $75,000 | $1,750 | $240K–$290K |
| $90,000 | $2,100 | $300K–$350K |
| $100,000 | $2,333 | $325K–$400K |
| $150,000 | $3,500 | $500K–$600K |
| $200,000 | $4,667 | $650K–$800K |
These are ceilings, not targets. Your debts, down payment, local taxes, and HOA fees all move these numbers. Treat the table as a starting point, then do your own math.
The mortgage payment is just the headline. Here’s what else comes out of that 28% budget:
Property taxes. These vary wildly — under 0.5% of home value per year in some states, over 2% in others like New Jersey and Illinois. On a $320K home at 1.1%, that’s ~$293/month.
Homeowners insurance. Budget $150–$250/month depending on your state and coverage. Florida and Texas run higher.
PMI (private mortgage insurance). Put down less than 20% and you’ll pay PMI — typically 0.5% to 1% of the loan amount per year. On a $300K loan, that’s $125–$250/month extra until your loan-to-value ratio (LTV) drops to 78%, when PMI falls off automatically (you can request removal at 80%).
HOA dues. Condos and many new subdivisions charge $200–$500+/month. Always ask before you fall in love with the place.
Maintenance. The rule of thumb is 1–2% of the home’s value per year. On a $320K home, that’s $3,200–$6,400 a year — or $267–$533 a month you should be setting aside. Roofs, water heaters, and furnaces don’t care about your budget.
Closing costs. 2–5% of the purchase price, due at signing. On $320K, that’s $6,400–$16,000 on top of your down payment.
Add it all up and the “real” cost of owning is easily 30–40% more than principal and interest alone. This is why the 28% rule exists — and why stretching past it hurts.
You’ve probably heard you “need” 20% down. You don’t. Here’s what’s actually available:
So on that $320K home, you could get in with $9,600–$16,000 down instead of $64,000.
But — and this is a big but — smaller down payments mean PMI, a bigger loan, and a higher monthly payment. That $320K home with 5% down at 6.8% runs roughly $2,350/month all-in instead of ~$2,050. That’s $300 more every month, which has to fit inside your 28% budget.
There’s no free lunch. Less down now = more per month later. Run both scenarios side by side before you decide.
Lenders boil your finances down to one number: DTI (debt-to-income ratio). Here’s how to calculate yours:
Example: $2,000 housing + $500 car + $200 student loans = $2,700. Divided by $7,500 income = 36% DTI.
Under 36% is the comfort zone. Many lenders will go to 43–45% for strong borrowers, and FHA loans sometimes stretch past 50%. But just because a lender allows 50% doesn’t mean your life works at 50%. Half your pre-tax income going to debt leaves very little room for living.
A pre-approval letter tells you the maximum a lender will lend you. It does not tell you what you should spend. Pre-approval is based on a preliminary underwriting review — the lender verifies your income, credit, and assets, but the full underwriting happens after your offer is accepted. And lenders don’t factor in:
Plenty of buyers get approved for 20–30% more than they can comfortably afford. The smart move? Decide your budget before you talk to a lender, then treat the pre-approval as a ceiling you’ll never touch.
If the payment makes you nervous on paper, it’ll feel twice as heavy in real life. Buy the house that lets you sleep at night.
Let’s get specific, since “how much house can I afford on $100K salary” is one of the most-searched versions of this question:
On $100,000/year: Your 28% housing budget is $2,333/month. With 20% down at ~6.5%, that buys roughly a $325K–$400K home depending on taxes and insurance. With only 5% down, PMI eats into the budget and you’re looking at more like $300K–$350K.
On $80,000/year: Budget is $1,867/month — roughly a $240K–$330K home. This is where the market gets tough in expensive metros; a bigger down payment or a cheaper area matters enormously here.
On $120,000/year: Budget is $2,800/month — roughly a $400K–$500K home. Comfortable in most markets, though still tight in places like San Francisco or New York.
On $60,000/year: Budget is $1,400/month — roughly a $180K–$250K home. Possible in affordable markets, very hard on the coasts. FHA loans with 3.5% down can help you get in the door.
Remember the golden rule from earlier: run both the 28% and 36% calculations and take the lower number. A $120K earner with $900/month in car and student loan payments has less buying power than an $80K earner who’s debt-free.
Don’t want to do the full 28/36 math? The 3x rule says: buy a home worth no more than 3 times your gross annual income. Some stretch it to 4x if debts are very low.
It’s crude — it ignores rates, taxes, and debts — but it’s directionally right and takes ten seconds. If a listing is at 5x your income, you already know it’s a stretch before you run a single calculation. Use the 28/36 rule for the real answer and the 3x rule for a gut check.
You’ve seen “28/36” — but lenders have formal names for these:
Here’s why both matter: you can pass the front-end test and fail the back-end one. A $100K earner eyeing a $2,333 housing payment passes front-end at exactly 28%. But add $800 in car payments and $400 in student loans, and the back-end ratio hits ($2,333 + $1,200) ÷ $8,333 = 42% — over the comfort zone, and some lenders will balk.
This is also why a salary-to-mortgage calculator that only asks for income is lying to you by omission. Debts are half the equation.
Can I afford a house on one income? Yes — but buy more conservatively than the formulas allow. Use 25% instead of 28% as your ceiling. On $80K, that’s $1,667/month instead of $1,867, or roughly a $275K–$300K home. Single-income households have no backup earner, so the buffer isn’t optional.
Self-employed? Lenders average your last two years of tax returns. Made $80K then $120K? They’ll use $100K. Income declining year over year? They’ll use the lower number — or ask for more documentation. Keep clean books; your bank statements are your pay stubs.
Does your credit score change how much house you can afford? Dramatically. On a $100K income: a 620 credit score at 7.5% caps your loan around $334K (~$417K home with 20% down). A 740 score at 6.5% stretches that to ~$369K (~$461K home). That’s $44,000 more house from the same salary, just for having better credit. If you’re 6–12 months from buying, improving your score is the highest-ROI move available.
If the down payment is what’s holding you back, you’re not out of options. Down payment assistance (DPA) programs — run by states, cities, and nonprofits — offer grants or forgivable second loans covering 3–5% of the purchase price. FHA’s 3.5% minimum already pairs well with DPA, and many first-time homebuyer programs bundle assistance with below-market rates or reduced mortgage insurance. The catch: most require homebuyer education courses and income limits, and some add a silent second lien that’s forgiven after 5–10 years of occupancy. Still, for buyers with strong income but thin savings, DPA can be the difference between renting another year and owning now.
Sellers and agents treat these very differently. Pre-qualification is a quick estimate based on numbers you provide — useful for your own planning, worthless in a bidding war. Pre-approval means a lender has verified your income, assets, and credit and committed to a loan amount (subject to appraisal). In competitive markets, offers without a pre-approval letter often go straight to the bottom of the pile. Get pre-approved before you fall in love with a house — and know that pre-approval is a ceiling, not a target.
Conventional and FHA lenders lean on DTI ratios, but VA loans add a second test: residual income — the money left over each month after all obligations (mortgage, debts, taxes, living expenses) are paid. The VA sets minimum residual income by region and family size because a veteran in an expensive coastal city needs a bigger cushion than one in a low-cost area. It’s arguably the most realistic affordability measure in the industry, and it’s part of why VA loans default less often despite allowing zero down and higher DTIs.
Here’s my honest advice, sibling to sibling:
And if you ever get a raise or a windfall, remember you can always pay it off faster with extra payments. Buying below your max today gives you that option tomorrow.
How much house can I afford on a $90K salary?
Roughly $300K–$350K, assuming 20% down, a ~6.5–7% rate, and moderate other debts. Your 28% housing budget is $2,100/month. Heavy car or student loan payments will pull that number down — run your exact debts through the 36% rule to be sure.
Is the 28/36 rule a law?
No. It’s a guideline most lenders use, not a legal requirement. Some loan programs allow higher DTIs — up to 45–50% for well-qualified conventional borrowers. But the rule exists because it works: buyers who stay within it default far less often.
How much mortgage can I afford vs. how much will a lender approve?
Lenders often approve 20–30% more than what’s comfortable. Approval is based on gross income and minimum debts. Affordability should be based on your real life — take-home pay, lifestyle costs, savings goals, and a buffer for surprises.
Do I really need 20% down?
No. FHA loans need 3.5%, conventional loans 3–5%, VA loans 0%. But less than 20% means PMI and a higher monthly payment, so make sure the bigger payment still fits your 28% budget.
What salary do I need to afford a $400K house?
Around $110K–$120K, assuming 20% down and a ~7% rate. Your all-in monthly payment would land near $2,600–$2,800, and 28% of your gross monthly income needs to cover it. Less down or higher taxes push the required salary up.
How much house can I afford on a $100K salary?
About $325K–$400K with 20% down at ~6.5%, depending on taxes, insurance, and your other debts. Your 28% housing budget is $2,333/month. With only 5% down, PMI shrinks that range to roughly $300K–$350K.
How much house can I afford on an $80K salary?
Roughly $240K–$330K. Your 28% budget is $1,867/month. In expensive metros this is tight — a larger down payment, cheaper area, or lower-rate loan program (FHA) makes the biggest difference at this income.
Can I afford a house on one income?
Yes, but use a 25% ceiling instead of 28% for safety. On $80K single income, that’s $1,667/month or roughly a $275K–$300K home. Single-income buyers should also keep a larger emergency fund since there’s no second paycheck as backup.
What is the front-end ratio in mortgages?
Your total monthly housing payment (PITI + HOA) divided by gross monthly income, expressed as a percentage. Lenders traditionally want it at or below 28%. It’s the “front” half of the 28/36 rule; the “back” half (36%) covers all debts combined.
Does a higher credit score let me afford more house?
Yes. Better credit means a lower rate, which means the same monthly budget buys a bigger loan. On a $100K salary, going from a 620 score (7.5%) to 740 (6.5%) can mean ~$44,000 more in buying power — same income, same budget, more house.
What is down payment assistance?
Down payment assistance programs from states, cities, and nonprofits provide grants or low-interest second loans to cover part of your down payment and closing costs. Many first-time buyers combine DPA with FHA loans. Most programs have income limits and require a homebuyer education course, but they can turn “not yet” into “now” for buyers with good income and thin savings.
What’s the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate based on self-reported numbers — fine for early planning. Pre-approval involves verified income, assets, and credit, plus a written commitment from the lender. Sellers take pre-approval seriously; in competitive markets, an offer without one is often ignored.
What is residual income on a VA loan?
Residual income is the money left each month after all debts, housing costs, taxes, and estimated living expenses are paid. The VA requires minimum residual income based on your region and family size — it’s an extra affordability safeguard beyond DTI, and one reason VA loans perform so well despite zero-down terms.
Ready to find your number? Plug your income, debts, and down payment into our free mortgage calculator and see your true monthly cost in seconds — no signup, no spam, just math. And if you’re weighing the long game, our amortization view shows exactly where every dollar goes over 30 years. Choosing between loan types? Our fixed vs adjustable-rate guide breaks down which fits your timeline — and our payment formula walkthrough shows how every dollar of the payment is built.
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