Quick answer: As a general rule, most buyers can afford a home priced at 3 to 4.5 times their annual gross income. On a $75,000 salary with 10% down and a 6.8% interest rate, that means a home in the $280,000 to $320,000 range. But your actual number depends on your debts, down payment, credit score, and where you live. Use our mortgage calculator to get your exact figure.
One of the biggest mistakes homebuyers make is letting a lender tell them how much they can afford. Banks will approve you for the maximum amount they're confident you can repay — but "can repay" and "can comfortably afford" are two very different things.
Lenders routinely approve borrowers at debt-to-income ratios of 43% to 50%. At that level, half your pre-tax income goes to debt payments, leaving very little room for savings, emergencies, or simply enjoying life. This is how people end up "house poor" — owning a home they technically qualify for but can't actually enjoy.
This guide gives you the real numbers — not what a bank will lend you, but what you can genuinely afford without sacrificing your financial health.
The 28/36 rule explained
The most reliable framework for home affordability is the 28/36 rule. It's been used by financial planners for decades, and while it's more conservative than what banks will approve, it's the standard that keeps homeowners financially healthy.
The 28/36 rule
The 28% portion — called the front-end ratio — covers your total monthly housing payment: principal, interest, property taxes, and homeowner's insurance (often called PITI). This is the maximum you should spend on housing alone.
The 36% portion — the back-end ratio — caps your total debt load. If you have a $400 car payment and $200 in student loans, those eat into the 36% before your housing budget is even calculated. This is why paying down debt before buying a home can dramatically increase your purchasing power.
Important distinction: The 28/36 rule uses your gross income (before taxes), not your take-home pay. Some financial advisors recommend calculating with net income for a more conservative and comfortable budget. Using net income typically reduces your affordable home price by 20 to 30%.
Affordability by income level
Here's what you can realistically afford at every major income level. These numbers assume 2026 average rates (around 6.8%), a 10% down payment, average property taxes (1.1% of home value), and standard homeowner's insurance ($1,200/year). If your situation differs, use our mortgage calculator for an exact figure.
| Annual salary | Monthly budget (28%) | Home price (10% down) | Home price (20% down) |
|---|---|---|---|
| $40,000 | $933 | $140,000 | $155,000 |
| $50,000 | $1,167 | $185,000 | $205,000 |
| $60,000 | $1,400 | $230,000 | $255,000 |
| $70,000 | $1,633 | $270,000 | $300,000 |
| $75,000 | $1,750 | $295,000 | $325,000 |
| $80,000 | $1,867 | $315,000 | $350,000 |
| $90,000 | $2,100 | $355,000 | $395,000 |
| $100,000 | $2,333 | $395,000 | $440,000 |
| $120,000 | $2,800 | $475,000 | $530,000 |
| $150,000 | $3,500 | $595,000 | $665,000 |
| $200,000 | $4,667 | $795,000 | $890,000 |
Notice how a 20% down payment vs. 10% increases your purchasing power by roughly 10 to 12%. That extra down payment reduces your loan amount and eliminates private mortgage insurance (PMI), which typically costs $100 to $300 per month on a conventional loan.
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Use the mortgage calculatorHow existing debt changes everything
The affordability table above assumes minimal existing debt. In reality, car payments, student loans, and credit card minimums can significantly reduce your home buying power. Here's how the same $80,000 salary plays out with different debt loads.
| Monthly debts | DTI used | Left for housing | Affordable home |
|---|---|---|---|
| $0 (no debt) | 0% | $1,867 | $315,000 |
| $300 (car only) | 4.5% | $1,867 | $315,000 |
| $600 (car + student) | 9% | $1,800 | $300,000 |
| $900 (car + student + cards) | 13.5% | $1,500 | $250,000 |
| $1,200 (heavy debt) | 18% | $1,200 | $195,000 |
At $1,200 per month in existing debts, that $80,000 earner goes from affording a $315,000 home down to $195,000 — a $120,000 reduction in buying power. This is exactly why paying off a car loan or credit card balance before applying for a mortgage is one of the highest-leverage financial moves you can make.
The hidden costs most buyers forget
Your mortgage payment is only part of the true cost of homeownership. Many first-time buyers are caught off guard by expenses that don't appear in the monthly mortgage figure. Budget for these on top of your PITI payment.
Property taxes vary enormously by location. The national average is about 1.1% of home value, but states like New Jersey and Illinois charge over 2%, while Hawaii and Alabama are under 0.5%. On a $350,000 home, the difference between a 0.5% and 2% tax rate is $437 per month.
Homeowner's insurance has increased significantly in recent years, especially in Florida, Texas, Louisiana, and California. The national average is about $1,200 to $1,800 per year, but coastal or disaster-prone areas can run $3,000 to $5,000 or more.
Maintenance and repairs should be budgeted at 1 to 2% of your home's value annually. For a $350,000 home, that's $3,500 to $7,000 per year ($290 to $580 per month) set aside for things like HVAC service, roof repairs, appliance replacements, and plumbing issues.
HOA fees apply to condos, townhouses, and many planned communities. These can range from $100 to $500 or more per month and are not included in your mortgage payment.
Utilities are often higher than renters expect, especially for heating, cooling, and water. Budget $200 to $500 per month depending on home size and climate.
Move-in costs are a one-time expense that catches many buyers short. Furniture, appliances, window treatments, lawn equipment, and minor repairs often total $10,000 to $25,000 for a first home.
How to increase your home buying power
If the numbers above put your target home out of reach, there are practical steps that can close the gap — some faster than you'd expect.
6 ways to afford more house
Pay off your car loan first
Eliminating a $400/month car payment can increase your home buying power by $60,000 to $70,000. If your car is almost paid off, wait a few months — the math is dramatically in your favor.
Improve your credit score
Moving from a 660 to a 740 score drops your rate by roughly 0.5 to 0.75%, which translates to $30,000 to $50,000 more in buying power. See our guide on credit scores for home buying.
Save a larger down payment
Going from 5% down to 20% down on a $350,000 home reduces your monthly payment by roughly $350/month (by shrinking the loan and eliminating PMI).
Look into down payment assistance
Most states offer grants or low-interest loans for first-time buyers. These programs can cover 3 to 5% of the purchase price, sometimes as a forgivable loan. Check your state's housing finance agency website.
Consider a 15-year mortgage
While monthly payments are higher, 15-year rates are typically 0.5 to 0.75% lower than 30-year rates. If you can handle the payment, you'll save $100,000+ in interest and build equity twice as fast.
Shop multiple lenders
Interest rates can vary by 0.5 to 0.75% between lenders for the exact same borrower. Getting quotes from at least 3 to 5 lenders is free and can save you tens of thousands over 30 years.
What lenders will approve vs. what you should spend
This is the most important distinction in home buying. Lenders approve based on your ability to repay. They don't factor in your retirement savings goals, your desire to take vacations, your children's education fund, or your need for an emergency cushion.
A conventional loan lender may approve you at up to 50% DTI. An FHA lender might go to 56.9%. At those levels, after taxes, you'd have very little left for anything beyond basic necessities.
Here's a reality check: if you earn $6,000/month after taxes and your lender approves you for a $2,800 housing payment, that leaves $3,200 for everything else — food, transportation, insurance, childcare, savings, and discretionary spending. For most families, that's tight.
The 28/36 rule exists specifically to prevent this situation. Stay within those guardrails and you'll have enough room to actually enjoy your home rather than just stress about paying for it.
Run your own numbers
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