How Much House Can You Afford with Your Salary?

Affordability is one of the biggest factors that determines how much house you can afford with your salary, and whether someone enters the real estate market. One survey found 62% of Americans believe they can’t afford to buy a home this year, with that number jumping to 87% for Gen Z respondents. 

This guide is for anyone considering buying a home and wanting to understand what price range fits their salary and budget. Understanding your home affordability helps you avoid financial stress and make informed decisions in the home-buying process.

Buying a home might be in your reach, but you need a clear understanding of your finances and what is affordable for your budget. This will help you understand how much house you can buy and whether the right-sized homes in your target neighborhood are within reach. 

Use this guide to learn how much house you can afford with your salary. It will help you break down key numbers and demystify your monthly housing costs.

How Much House Can You Afford with Your Salary? (Quick Answer)

How much house can you afford with your salary?
Most experts recommend that your total monthly housing costs should not exceed 28% to 30% of your gross monthly income, and your total debts should not exceed 36% of your gross monthly income. Lenders use your income, debts, and down payment to determine affordability.

What Does “How Much House Can You Afford?” Really Mean?

There are two aspects of affordability to consider: personal and technical. Your personal affordability is your comfort level with making a large down payment or taking on a higher monthly mortgage payment. The technical affordability is based on what lenders are willing to offer you. 

Everyone has personal limits for how much they want to keep in their savings account and what they feel comfortable paying monthly. You may find that your personal affordability is more conservative than the maximum loan size you can take out. Just because you’re approved for a certain amount doesn’t mean it fits your lifestyle or future goals.

Before you start working with mortgage lenders, reflect on your finances and identify what you consider to be affordable. This way, you can focus on homes you can afford, not just the houses at the maximum end of your borrowing power.

The Key Factors That Determine How Much House You Can Afford

You don’t need a strong financial background to calculate how much house you can afford. You simply need to be aware of a few key concepts that lenders review. Lenders typically require a two-year history of consistent income for loan approval. Here are the main factors that can guide your internal calculations and help you understand how lenders define home affordability. 

Gross monthly income

Lenders look at your monthly income before taxes and other deductions (like healthcare) to calculate your debt-to-income ratio. This is different from your net pay, also called your take-home pay. 

Debt-to-income (DTI) ratio

Debt-to-income is one of the biggest indicators of home affordability. Your DTI is your total monthly debts divided by your gross monthly income. Debts can include student loans, car payments, personal loans, and other planned costs. 

Credit score

Your credit score can have a big impact on home affordability. Lenders often offer lower interest rates to borrowers with good credit, which can lower their estimated monthly payments. 

Down payment

The larger the down payment, the lower the typical monthly payment. Saving for a larger down payment could make your house more affordable. 

Total monthly housing costs

Other expenses can decrease affordability. High property taxes, homeowner’s association (HOA) fees, and insurance rates can add up and limit the amount of house you can afford. Your lender should take these into consideration when reviewing your mortgage loan. 

Beyond the loan, homeowners need to set aside funds for unexpected repairs and ongoing maintenance costs. Experts recommend saving between 1% to 4% of the home’s value.

Once you add up these expenses, your housing costs should not exceed 30% of your gross monthly income. While there is wiggle room – everyone has different levels of comfort with their finances – this rule of thumb can help you define affordability. 

Common Home Affordability Rules of Thumb (and Their Limits)

Everyone’s financial situation is unique, so there are a few common rules of thumb that can help you understand how much house you can afford. The first is the 28/36 rule, which states housing costs should be no more than 28% of your gross monthly income and no more than 36% of your total debt. This guideline is meant to protect the finances of buyers. If you receive an unexpected bill or need to take on new monthly costs (like daycare for when you have a baby), your housing bill won’t get in the way of living your life. 

Another common rule of thumb is the 3x – 4x salary rule. This states you should look for a house that is up to four times your gross annual salary. If you earn $100,000 per year, you would look for houses that cost up to $400,000. 

While these are nice guidelines that can help you set a budget range, they aren’t always realistic. In high-cost-of-living areas, homes might start at a much higher rate than four times your annual salary. You also might need to budget for housing to take up more than 30% of your monthly spending. Different lifestyles also might not fit into this easy math. If you have a large family, you might need a bigger house to fit everyone. 

These rules of thumb are starting points. They do not replace the data from a home affordability calculator or the insights from your mortgage lender.

Now that you know key factors, let’s see how these numbers play out in real-world examples.

How Much House Can You Afford? (Mortgage Calculator Example)

The following table provides illustrative estimates for home affordability. It assumes that the borrower is taking out a 30-year fixed mortgage from a conventional loan. The borrower has a 20% down payment, and the housing costs are about 28% of their gross monthly income. The borrower also lacks significant additional debt. 

This sample table also uses a 6.5% to 7% interest rate example, based on 2026 trends. National interest rates can change monthly payment estimates, even if the home purchase price remains the same.

These numbers do not include homeowners’ insurance, property taxes, and HOA fees. They also do not take your credit score and existing debt into account. They are purely estimates and may fall on the higher end of the affordability spectrum. Each calculation is based on a 20% down payment, and not every buyer has that much saved. Your affordability may be lower if you have a smaller down payment for your lender.

Understanding these estimates can help you set realistic expectations for your home search. Next, let’s see how your down payment amount can further impact affordability.

How the Down Payment Amount Changes What You Can Afford

A lot of financial factors are out of your control when calculating your monthly mortgage payment. You have little control over national interest rates, local housing prices, and even your existing debt. However, you can decide if you want to save for a higher down payment in order to reduce your monthly debt. 

The chart below uses a home price of $400,000 with a conventional loan at a 6.5% interest rate and a good credit score to show how small changes to your down payment can affect affordability. 

Once again, this chart does not include property taxes, homeowners’ insurance, and homeowners’ association fees. It also does not include private mortgage insurance (PMI), which borrowers need to pay until they have 20% equity in the property. PMI costs around 1% of the loan each year. In the chart above, each line would need to add PMI to the estimated monthly mortgage payments, except for the 20% down payment example.

As you can see, the higher the down payment, the more affordable the monthly payment. Not only does this increase how much house you can afford, but it can also decrease your total interest debt over time.

That said, you don’t always want to submit your largest possible down payment. Many homeowners are willing to accept a higher mortgage payment if it means they keep money in savings as an emergency fund. Financial experts recommend having at least six months’ worth of savings for an emergency fund to cover unplanned life expenses.

Knowing how your down payment affects your monthly payment can help you plan your savings strategy. Next, let’s discuss why your monthly mortgage payment matters more than the purchase price.

Your Mortgage Payment Matters More Than the Purchase Price

The reality of home buying is that two people with the same annual income can afford very different homes. The down payment each person has saved, property taxes in the area, and existing debt, like student loan payments, can affect loan qualifications more than the actual purchase price. While this article can offer estimates of price ranges, each person needs to understand what affordability means based on their specific situation.

The first step in calculating how much you can comfortably afford is to be transparent about your credit report, down payment, and existing debt payments. Your monthly gross income is only one factor that determines how much house you can buy.

Understanding your unique situation is key to making a confident home purchase. Next, let’s look at common mistakes buyers make when calculating affordability.

Common Mistakes Buyers Make When Calculating Affordability

There are a few common mistakes that buyers encounter when they enter the real estate market. These can result in higher monthly payments or a smaller emergency fund than you would like. Here are a few things to consider as you search for a home loan. 

Spending the full pre-approval amount. This could put you on the higher end of your budget, limiting cash reserves for savings, retirement funds, and recreational spending.

Leaving little in savings after your down payment. You need emergency funds to cover unexpected expenses. Putting all your funds into your house could leave you financially vulnerable.  

Forgetting about all the loan factors. Borrowers often forget about private mortgage insurance or homeowners’ association fees until they see them in their closing costs. 

Ignoring maintenance and repair costs. Just because this isn’t a fixed item on the budget doesn’t mean it’s not important. Make sure you save for unexpected repairs that will crop up. 

Not planning for family changes. Consider how your monthly expenses may increase as you have kids or your kids leave for college. Life may get more expensive over time. 

Relying on overtime or bonuses to qualify for loans. Not only is this income unstable, but overwork can lead to burnout. Focus on your base annual income before extra work. 

Trying to hide debt from your lender. The underwriting process will uncover any debt you have, ranging from car loans to credit card debt. It is better to be transparent in the borrowing process. 

It’s understandable that you want to buy a house, but you need to think about your long-term financial stability. You don’t want your monthly debt payments to stress out your family and limit your financial freedom.

Avoiding these mistakes will help you stay on track. Now, let’s explore how to calculate your personal comfort zone for home affordability.

How to Calculate Your Personal Comfort Zone

This guide has provided several examples of monthly payment calculations and fair affordability ranges, but it’s up to you to decide what you feel comfortable paying. Here are a few steps you can follow to understand how much mortgage you can afford. 

• Start with monthly take-home pay. This determines how much spending money you can work with. 
• Subtract fixed expenses and savings goals. This includes monthly bills like student loans, as well as the amount you place in savings for unexpected expenses. 
• Determine a payment that still allows flexibility. With the amount you have left, consider how much you are willing to allocate to housing. You might not want your home loan to be much higher than your current rental rate. 
• Use affordability calculators as guides. Work backwards to see what size house you can get with your desired monthly payment. Include all possible fees in your estimates. 
• Consider your down payment. Know how much you feel comfortable putting down based on your current cash on hand. 

This is an easy way to determine if you can afford to buy a house in your area. It provides an honest look at your current take-home pay, debts, and savings. This is a quick starting point to guide your future real estate efforts.

Sometimes, buying below your maximum affordability is the best choice. Let’s see why.

Sometimes It Makes Sense to Buy Below What You Can Afford

There are plenty of times when it makes sense to buy below your maximum budget and enjoy lower monthly debt payments. You may live in a low-cost-of-living area where houses fall below your target range. You also might decide to live in a smaller house to make room for travel, increase your savings, or prepare to start a family. 

Buying below your maximum affordability can also protect your family in the event of job changes or reductions in income. You can tap into your savings or continue to afford your current standard of living.

Many repeat buyers intentionally buy under budget because they want to be financially comfortable. The best mortgage option is one that doesn’t stress you out.

Affordability Is About Freedom, Not Maxing Out

As you meet with different lenders, you may receive varying mortgage payment numbers. Some financial institutions might push the higher end of your debt-to-income ratio and promise home affordability that is much higher than you expect. Use a home affordability calculator to understand what you think you can buy, and then consider what you want your monthly payment to be. Your personal level of comfort with monthly payments is just as important as what lenders are willing to give you. 

Turn to FastExpert if you still aren’t sure about your target monthly mortgage payment and other expenses. Local agents can help you understand regional property taxes and other costs, like homeowners’ insurance or a home appraisal. 

You should never feel pressured to buy a certain house or shop within a price range you aren’t comfortable with. Hiring a trusted Realtor is the first step toward a comfortable buying journey that protects your finances. Try FastExpert today and meet Realtors in your area who can help you reach your housing goals.