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How Much House Can I Afford on My Salary?

How much house can I afford? Work back from the debt-to-income limit a lender actually applies, not from a payment you pick: that is what this calculator does.

Example numbers

30 years

Assumptionsdebt-to-income limit 43%, property tax rate 1.1%, home insurance rate 0.5% and 1 more

Result

The answerfrom an example

A lender would approve you for about $457,944, a payment of $3,291.67 a month, escrow included.

Worked on $110,000 income, $650 of other debts, $60,000 down at 6.50%. Change anything below to use yours.

Home price you can buy
$457,944
Monthly housing payment
$3,291.67
Your total debt allowance
$3,941.67

The figures behind it

Home price you can buy
$457,944
With $60,000 down, borrowing $397,944.
Monthly housing payment
$3,291.67
Everything the lender counts, escrow and HOA included.
Your total debt allowance
$3,941.67
43% of gross monthly income, which is the ceiling underwriting applies.
Left for housing
$3,291.67
After $650 of existing debt payments comes out.
Escrow eats
23.6%
Of the payment. That share is why a principal-and-interest estimate overstates what you can buy.
Clearing your other debts
+$80,537
Would raise the price you qualify for to $538,481.
The monthly payment that buys it$3,291.67
  • Principal & interest$2,515
  • Property tax$420
  • Home insurance$191
  • Mortgage insurance$166
Payment scheduleShow
ItemAmount
Gross monthly income$9,166.67
Debt-to-income limit43%
Total debt allowance$3,941.67
Less existing debts−$650
Available for housing$3,291.67
Principal & interest$2,515.27
Property tax$419.78
Home insurance$190.81
Mortgage insurance$165.81
HOA dues$0.00
Loan amount$397,944
Down payment$60,000
Maximum home price$457,944

What this result assumes

  • This is what an underwriter would allow, not what you should spend. The debt-to-income ceiling is a lending limit; it takes no view of childcare, saving, travel or anything else that is not a debt payment.
  • Property tax and insurance are inside the cap, not on top of it. That is why they reduce the price you qualify for: a larger house carries a larger tax bill, which leaves less room for principal and interest.
  • Mortgage insurance is applied when the deposit is under 20% of the price, at 0.5% of the loan a year, a mid-range figure. Your quoted rate depends on your credit and the size of the deposit.
  • Income is gross, before tax, which is what underwriting uses. Your take-home pay will be considerably less, and the payment comes out of that.
  • Lenders also apply a front-end ratio to housing alone, look at reserves, credit score and employment history, and may cap the loan below the price this suggests. Treat the figure as a ceiling to test against, not an approval.

Property tax, insurance and mortgage insurance all count inside that cap, which is why they reduce the price you qualify for rather than adding to it.

Methodology

Reviewed by Acun Özdilek

Affordability is a constraint, not a payment

Most affordability calculators run a payment calculation backwards: pick a monthly figure, solve for the loan. That is not how approval works. An underwriter caps your total monthly debt — the new housing payment plus every existing obligation — at a share of your gross income, and everything has to fit inside that number.

The housing payment counted in that ratio is the whole thing: principal, interest, escrowed property tax, hazard insurance, mortgage insurance where it applies, and HOA dues. Not the loan payment. On the default figures, escrow and HOA take roughly a fifth of the allowance, which is a fifth that cannot go toward the house.

That is the practical consequence: a calculator that works back from principal and interest alone will tell you that you can buy tens of thousands of dollars more house than a lender will fund.

Why this is solved numerically

The price appears on both sides of the constraint. A larger house carries a larger property tax and insurance bill, which leaves less of the allowance for principal and interest, which caps the loan, which caps the price. There is no tidy rearrangement.

So the answer is found by bisection: the largest price whose full housing cost fits the allowance, narrowed to the dollar. The test suite checks both halves of that — the resulting payment fits the ratio, and a materially larger house does not.

Mortgage insurance adds a discontinuity at 80% loan-to-value, which the search handles naturally because it evaluates the real cost function at each candidate price rather than assuming a smooth one.

What the ratio ignores, and what it does not

The 43% figure is a conventional ceiling rather than a law; lenders stretch it with strong credit, large reserves or a big deposit, and some loan programmes allow more. It is also a back-end ratio — total debt. Lenders typically apply a second, tighter test to housing alone, so a borrower with no other debts may still be capped below what this shows.

What the ratio counts is debt payments. What it does not count is everything else: childcare, health insurance premiums, commuting, saving, tuition, travel. Two households with identical incomes and debts can face completely different real affordability, and underwriting cannot see the difference.

Income here is gross, before tax, because that is what underwriting uses. Your take-home is materially less, and the payment comes out of the smaller number. A payment at 43% of gross can easily be over 60% of what actually arrives in your account.

Assumptions

  • The debt-to-income ratio is a back-end ratio covering all debt payments plus the full housing cost.
  • Income is gross, before tax, as underwriting uses.
  • Property tax and insurance are constant shares of the home’s value and do not escalate.
  • Mortgage insurance is charged at 0.5% of the loan a year when the deposit is under 20%.
  • The interest rate is fixed for the whole term.
  • Closing costs are paid separately and do not reduce the down payment available.
  • A lender’s separate front-end housing ratio, credit score, reserves and employment tests are not modelled. The debt-to-income ratio calculator shows both ratios.
  • Loan limits — conforming, FHA and VA ceilings — are not applied.
  • Non-debt living costs are excluded entirely, because the ratio excludes them.

Sources

Common questions

How much house can I afford on my salary?

It depends on your other debts as much as your income. A lender caps total monthly debt, including the full housing payment with tax and insurance, at around 43% of gross income. On $110,000 with $650 of existing payments and $60,000 down, that works out to a specific price the calculator solves for exactly.

How much house can I afford on a $60,000 salary?

About $245,000, assuming $650 a month of other debts, $60,000 down, a 6.50% rate over 30 years and the usual 43% debt-to-income cap: the housing payment is held to $1,500 a month with tax and insurance inside it. Set your own debts and deposit at $60,000 of income to see how far that moves.

How much house can I afford on an $80,000 salary?

About $325,000 on the same assumptions ($650 of other debts, $60,000 down, 6.50%, 43% cap), which is a $2,217 monthly housing payment. Every extra $100 of car or card payments takes roughly $15,000 off that price; start from $80,000 and change the debts line to watch it.

How much house can I afford on a $100,000 salary?

About $414,000 with $650 of other debts, $60,000 down and 6.50% over 30 years, for a $2,933 housing payment. The deposit matters as much as the income: at $100,000, raising the down payment by $20,000 lifts the price by more than $20,000, because the smaller loan also drops mortgage insurance.

How much house can I afford on a $150,000 salary?

About $636,000 on the same assumptions, with a $4,725 monthly housing payment. That is the lender ceiling, not a recommendation; the calculator pre-filled at $150,000 also shows what the payment leaves of your take-home each month, which is the number to decide on.

What is a debt-to-income ratio and what is the limit?

It is your total monthly debt payments divided by gross monthly income. 43% is the usual conventional ceiling, though lenders stretch it with strong credit, large cash reserves or a bigger deposit. It counts card minimums, car and student loans and the new housing payment, but not rent you are leaving, utilities or groceries.

Why does paying off a car loan let me buy more house?

Because it frees room inside the same ratio. Every dollar of existing debt payment is a dollar the housing payment cannot use, and that dollar supports several hundred dollars of house at current rates. The calculator shows exactly what clearing your other debts would add, it is usually a larger figure than people expect.

Should I borrow the maximum a lender approves?

Almost certainly not. The ratio is a lending limit, not a budget: it counts debt payments and ignores childcare, health premiums, commuting, saving and everything else you spend on. It also uses gross income, so a payment at 43% of gross can exceed 60% of what actually reaches your account. Treat the figure as a ceiling to stay well under.

Why is my number lower than other calculators?

Because property tax, insurance and PMI are counted inside the cap here, as a lender counts them. A calculator that works back from principal and interest alone ignores roughly a fifth of the payment and will show a materially higher price than any underwriter would fund.

What will the payment actually be?

The breakdown above splits it, and the mortgage calculator runs the same figures with a full amortization schedule. If you are weighing buying against staying put, renting versus buying compares the two over a horizon rather than month to month.

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