Published 5/3/2026 | Updated 5/3/2026
Home & Loan
Find out exactly how much house you can afford based on your income, debt, and down payment. Use our free calculator and follow the proven rules lenders use.
By MJK Tools Editorial Team
Buying a home is the biggest financial decision most people will ever make - and the most common mistake is skipping the math. This guide will show you exactly how much house you can afford based on your real numbers, not guesswork.
👉 Want the answer right now? Use our free Home Affordability Calculator - no signup required.
Lenders use a simple rule to decide how much house you can afford:
This is called the 28/36 rule and it is the starting point every mortgage lender uses.
| Rule | Calculation | Max Amount |
|---|---|---|
| 28% (mortgage only) | $80,000 ÷ 12 × 0.28 | $1,867/month |
| 36% (all debt) | $80,000 ÷ 12 × 0.36 | $2,400/month |
So if you earn $80,000 per year and have $300/month in other debt (car loan, student loan), your maximum mortgage payment would be:
$2,400 - $300 = $2,100/month maximum
Your monthly payment depends on three things: loan amount, interest rate, and loan term.
At current average mortgage rates (around 6.5-7% for a 30-year fixed loan in 2026), here is what different monthly payments can buy:
| Monthly Payment | Home Price You Can Afford* |
|---|---|
| $1,000/month | ~$157,000 |
| $1,500/month | ~$236,000 |
| $2,000/month | ~$315,000 |
| $2,500/month | ~$394,000 |
| $3,000/month | ~$472,000 |
*Assumes 20% down payment, 6.8% rate, 30-year loan, excludes taxes and insurance.
For your exact number, use our Mortgage Calculator - it includes property tax, insurance, and PMI estimates.
This is your income before taxes. Lenders look at gross income, not take-home pay.
Pro tip: If you are self-employed, lenders will average your last 2 years of tax returns. A great year followed by a bad year can hurt your qualification.
DTI is the most important number lenders look at. It compares your monthly debt payments to your gross monthly income.
DTI Formula:
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
What lenders want to see:
Debts that count toward DTI:
Use our Debt-to-Income Ratio Calculator to find your exact DTI before applying.
The more you put down, the less you borrow - and the lower your monthly payment.
| Down Payment | Impact |
|---|---|
| Less than 20% | You pay PMI (private mortgage insurance), adding $100-$300/month |
| 20% or more | No PMI required, lower monthly payment |
| 3-5% | Available with FHA and conventional loans for first-time buyers |
FHA loans allow as little as 3.5% down with a credit score of 580+. Conventional loans allow 3% down for qualifying first-time buyers.
Use our Down Payment Calculator to figure out how long it will take to save your target amount.
Your credit score directly affects your mortgage interest rate - and your rate determines how much house you can afford.
| Credit Score | Rate Impact | Monthly Payment on $300k Loan |
|---|---|---|
| 760+ | Best rates (~6.5%) | ~$1,896 |
| 700-759 | Good rates (~6.8%) | ~$1,955 |
| 650-699 | Higher rates (~7.3%) | ~$2,057 |
| 600-649 | Much higher (~8.0%) | ~$2,201 |
| Below 600 | Difficult to qualify | - |
A 100-point difference in credit score can cost you $100-$200 more per month on the same loan.
Before applying for a mortgage:
Most people forget that your monthly mortgage payment is not just principal and interest. Lenders qualify you based on PITI:
Property taxes vary dramatically by location - from under 0.5% in some states to over 2% in others. In high-tax states like New Jersey or Illinois, property taxes can add $500-$1,500+ to your monthly payment on a $400,000 home.
Always calculate PITI, not just PI. Our Mortgage Calculator includes tax and insurance estimates so you see your real monthly cost.
Here are quick estimates using the 28% rule, assuming 20% down, 6.8% interest rate, and 30-year term:
| Annual Income | Max Monthly Mortgage | Estimated Home Price |
|---|---|---|
| $40,000 | $933 | ~$138,000 |
| $60,000 | $1,400 | ~$207,000 |
| $80,000 | $1,867 | ~$277,000 |
| $100,000 | $2,333 | ~$346,000 |
| $120,000 | $2,800 | ~$415,000 |
| $150,000 | $3,500 | ~$519,000 |
| $200,000 | $4,667 | ~$692,000 |
These are starting estimates. Your actual number depends on your debt, credit score, down payment, and location. Use our Home Affordability Calculator for a personalized result.
Many first-time buyers underestimate the true cost of owning a home. Beyond your mortgage payment, budget for:
Rule of thumb: Add 25-30% to your mortgage payment to estimate your true monthly cost of homeownership.
Just because a lender approves you for $400,000 does not mean you should spend $400,000.
Lenders approve you based on the maximum they are willing to risk - not on what is comfortable for your lifestyle. Being "house poor" means you can technically make the payment but have nothing left over for savings, emergencies, or enjoying your life.
Consider buying 15-20% below your maximum approval to keep financial flexibility. This gives you room for:
Buying is not always smarter than renting. Use our Rent vs. Buy Calculator to compare your specific situation.
Buying makes sense when:
Renting may be smarter when:
Step 1: Calculate your gross monthly income (all sources before tax)
Step 2: Multiply by 0.28 -> this is your maximum mortgage payment (PITI)
Step 3: Subtract your monthly property tax estimate and insurance estimate -> this is your max principal + interest payment
Step 4: Use our Mortgage Calculator to find what loan amount that payment supports at current rates
Step 5: Add your down payment -> that is your maximum home price
Step 6: Check your DTI using our Debt-to-Income Calculator to confirm you are below 36%
On a $50,000 salary, your gross monthly income is $4,167. Using the 28% rule, your maximum mortgage payment (PITI) is about $1,167/month. At current rates with 20% down, this supports a home price of roughly $155,000-$175,000 depending on your location's property taxes. If you have significant existing debt, your number will be lower.
Yes, in most markets. On $70,000/year, your maximum monthly mortgage payment is about $1,633. With 20% down at current rates, you can typically qualify for a home in the $230,000-$260,000 range. In high cost-of-living areas like California or New York, this may be challenging. In the Midwest or South, this buys a solid home.
Most conventional loans require a minimum 620 credit score. FHA loans allow scores as low as 580 (with 3.5% down) or even 500 (with 10% down). However, the best interest rates go to borrowers with 760+ credit scores. Improving your credit score before applying can save you tens of thousands over the life of the loan.
The minimum depends on the loan type: 3% for some conventional loans, 3.5% for FHA loans, and 0% for VA loans (military veterans) and USDA loans (rural areas). However, putting down 20% eliminates PMI, which saves $100-$300/month. Use our Down Payment Calculator to plan your savings timeline.
Student loans count toward your DTI. If you have $500/month in student loan payments, that directly reduces how much mortgage payment you can qualify for by $500. Income-driven repayment plans can lower your reported monthly payment for DTI purposes - talk to a lender about how your specific loans are counted.
A 15-year mortgage has a higher monthly payment but a lower interest rate and you build equity much faster - paying dramatically less interest over the life of the loan. A 30-year mortgage has a lower monthly payment, giving you more flexibility, but costs more in total interest. If you can comfortably afford the 15-year payment, it builds wealth faster. If the 15-year payment stretches your budget, the 30-year gives you breathing room.
The simple answer to "how much house can I afford" is: 2.5 to 3x your annual gross income, assuming you have 20% down, good credit, and minimal existing debt. But your real number depends on your specific situation.
Use these tools to get your exact number:
All free. No signup. Instant results.
MJK Tools provides planning estimates for informational purposes only. This is not professional financial advice. Consult a licensed mortgage professional before making home purchase decisions.
A practical plan to shorten your mortgage term by a decade using extra principal payments, refinancing checks, and budget automation.
Read articleA practical method to size, build, and maintain an emergency fund based on your essential monthly expenses and risk profile.
Read articleUse the 50/30/20 framework to create a realistic monthly budget and adapt it to real-world expenses.
Read article