How we estimated it
We used the common 28/36 rule: housing costs up to 28% of gross monthly income, and total debt payments up to 36%. Housing here means the full monthly payment: principal and interest, property tax, homeowners insurance and PMI. The assumptions are the same for every income: a 30-year fixed loan at 6.5%, a $40,000 down payment, $400 a month in other debt (car, student loans, cards), property tax of 1.1% of the price per year, $1,800 a year for insurance and PMI of 0.5% of the loan per year when the down payment is under 20%. These are scenario assumptions, not a rate quote.
Estimated maximum home price by income (6.5%, 30 years, $40,000 down)
| Gross income | Max monthly housing payment | Max home price | Loan amount | Limit that applies |
|---|---|---|---|---|
| $60,000 | $1,400 | $200,000 | $160,000 | 36% total debt |
| $80,000 | $1,867 | $259,000 | $219,493 | 28% housing |
| $100,000 | $2,333 | $320,000 | $280,463 | 28% housing |
| $150,000 | $3,500 | $473,000 | $432,888 | 28% housing |
Our own calculation with Gliora's affordability logic. Prices rounded to the nearest $1,000. Estimate only.
On $60,000 a year the rule supports a monthly housing payment of $1,400 and a price around $200,000. At $150,000 the payment ceiling rises to $3,500 and the price to about $473,000. Because the down payment is fixed, the price grows slightly slower than income: $150,000 is 2.5 times $60,000, while the affordable price is 2.4 times higher.
The interest rate matters more than most people expect
Rates are the biggest swing factor. The table below keeps everything else equal and changes only the rate. For a $100,000 income, moving from 6% to 7% takes the affordable price from $333,000 to $309,000, a difference of $24,000. (The $60,000 row barely moves between 6.5% and 7.0% because the limit lands at about $200,000, exactly 20% down with this $40,000 deposit, where PMI no longer applies.)
Estimated maximum home price at different mortgage rates
| Gross income | 6.0% | 6.5% | 7.0% | 7.5% |
|---|---|---|---|---|
| $60,000 | $206,000 | $200,000 | $200,000 | $193,000 |
| $80,000 | $269,000 | $259,000 | $250,000 | $242,000 |
| $100,000 | $333,000 | $320,000 | $309,000 | $298,000 |
| $150,000 | $492,000 | $473,000 | $455,000 | $438,000 |
Our own calculation, same assumptions as above, 30-year fixed, $40,000 down. Rounded to the nearest $1,000.
Other debt can become the limit
On a $100,000 income, the 28% rule alone allows a $2,333 payment. Once other monthly debts get large, the 36% total-debt cap takes over and shrinks it. Here is the same $100,000 income with three debt levels:
Effect of existing monthly debt on a $100,000 income
| Other monthly debt | Max monthly housing payment | Max home price | Limit that applies |
|---|---|---|---|
| $0 | $2,333 | $320,000 | 28% housing |
| $400 | $2,333 | $320,000 | 28% housing |
| $1,000 | $2,000 | $277,000 | 36% total debt |
Our own calculation, 6.5% rate, 30 years, $40,000 down.
Carrying $1,000 a month in other debt instead of none lowers the affordable price from $320,000 to $277,000. Paying off a car loan or card balance before applying can add more buying power than a small raise.
Run your own numbers
Your tax rate, insurance, HOA and down payment will differ from ours. Plug yours into the how much house can I afford calculator, then check the full monthly cost of a specific price with the mortgage calculator. To see how much of your paycheck is really available, start with the paycheck calculator.
For guidance only, not financial advice. A lender decides what you actually qualify for.
Sources
- Consumer Financial Protection Bureau: Owning a Home (mortgage costs, how lenders look at debt-to-income).
- CFPB: What is private mortgage insurance?
- CFPB: What is a debt-to-income ratio?