How much house can I afford on my salary?

The traditional guideline is 3-4x your annual gross salary. At $80,000: $240,000-$320,000 home price range. More precisely, use the 28/36 rule: housing costs under 28% of gross monthly income and total debts under 36%. Current interest rates significantly affect this calculation -- use the home affordability calculator for a precise number.

What is the 28/36 rule for home affordability?

The 28/36 rule: housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of gross monthly income, and total debt obligations should not exceed 36%. These are lender guidelines -- financially conservative households often target 20-25% on housing to maintain flexibility for savings, emergencies, and other financial goals.

How much down payment do I need?

The minimum varies by loan type: 3% for conventional (with PMI), 3.5% for FHA, 0% for VA and USDA. The optimal is 20% to avoid Private Mortgage Insurance. On a $300,000 home, 20% down = $60,000. PMI typically costs 0.5-1.5% of the loan value annually ($125-$375/month on a $300K loan) until you reach 20% equity.

What are the hidden costs of buying a home?

Beyond the mortgage: property taxes (1-3% of value annually), homeowner’s insurance ($1,000-$3,000/year), maintenance and repairs (1-2% of value/year), HOA fees if applicable ($0-$600+/month), and closing costs (2-5% of purchase price). Total hidden costs often add $500-$1,500/month -- always include these in affordability calculations.

Should I buy at the top of what I qualify for?

No. Qualifying for the maximum is different from affording the maximum comfortably. Buying at the limit leaves no financial buffer for job loss, unexpected home repairs, or life changes. Most financial advisors recommend targeting 80-90% of your maximum qualification to maintain emergency fund flexibility and avoid feeling 'house poor.'

How to Use the Home Affordability Calculator: Complete Guide

The home affordability calculator translates your income, debt, down payment, and target monthly payment into a realistic home price range. The most accurate results come from using your actual gross income, all current monthly debt minimums, and a realistic estimate of property taxes and insurance for your target area.

Overview

Home affordability calculator inputs

Input	What to Enter	Why It Matters
Annual gross income	Pre-tax household income from all sources	Primary determinant of maximum mortgage payment
Monthly debt payments	All minimum required debt payments	Reduces available housing budget
Down payment	Cash available for down payment	Determines loan amount and whether PMI is required
Interest rate	Current mortgage rate or your estimated rate	Major impact on monthly payment
Property tax rate	Estimated annual rate for target area (0.5-3%)	Can add $200-$700/month to housing cost
Homeowner’s insurance	Annual estimate ($1,000-$3,000 typical)	Included in total housing payment (PITI)

💡Always Include Property Taxes and Insurance

Many online affordability calculators show principal and interest only -- leaving out property taxes, insurance, and HOA. These additional costs can add $400-$1,000/month to your actual housing cost. Always calculate with PITI (Principal, Interest, Taxes, Insurance) for an accurate picture.

Key Points

PITI = Principal + Interest + Taxes + Insurance -- the complete monthly housing payment
Use gross income (before taxes) as the income input -- that is what lenders use
Property tax rates vary dramatically by location: 0.3% in Hawaii to 2.5%+ in New Jersey
PMI adds $100-$400/month if your down payment is under 20%
HOA fees in condos and planned communities can add $200-$600/month to housing costs

Calculate Your Home Affordability

Use the home affordability calculator to see your maximum home price based on your income, debts, down payment, and current mortgage rates.

Calculate How Much Home You Can Afford

Enter your income, debts, and down payment to see your maximum affordable home price.

Open Home Affordability Calculator →

How to Use the Home Affordability Calculator: Complete Guide

Overview

Key Points

Calculate Your Home Affordability

Frequently Asked Questions

Frequently Asked Questions