📐 The 3 Rules of Home Affordability
Rule #1: The 28% Rule (Front-End DTI)
HOUSINGYour monthly housing costs should be ≤28% of gross monthly income.
Housing Budget = Gross Monthly Income × 0.28
Example: $8,333/month income × 0.28 = $2,333 max housing payment
Rule #2: The 36% Rule (Back-End DTI)
TOTAL DEBTYour total monthly debts (housing + car + student loans + credit cards) should be ≤36% of gross income.
Total Debt Budget = Gross Monthly Income × 0.36
Example: $8,333/month × 0.36 = $3,000 max total debt payments
Rule #3: The 3x Income Rule
QUICK ESTIMATEA quick rule of thumb: You can afford a home ~3x your annual income.
Max Home Price ≈ Annual Income × 3
Example: $100,000 income × 3 = ~$300,000 home
⚠️ Important: These Are Maximums!
Just because you CAN afford a $400,000 home doesn't mean you SHOULD. Leave room for emergencies, retirement savings, and enjoying life. Many experts recommend spending 25% or less of income on housing.
🧮 Detailed Affordability Calculator
Step-by-Step Calculation
Step 1: Calculate Your Max Monthly Payment
Gross Monthly Income: $_______ × 0.28 = $_______ max housing payment
Step 2: Subtract Non-Mortgage Costs
Max Housing Payment: $_______
- Property Taxes (~1.1% of home value/12): $_______
- Homeowner's Insurance (~$100-200/mo): $_______
- PMI (if <20% down, ~0.5-1%/year): $_______
- HOA (if applicable): $_______
= Max Mortgage Payment (P&I): $_______
Step 3: Convert to Home Price
Use a mortgage calculator or get pre-approved to convert your max P&I payment to a home price based on current rates.
🎯 Get Your Exact Number
Skip the math! Get pre-approved and a lender will tell you exactly how much you can afford based on your complete financial picture.
Get Pre-Approved Now →📊 Factors That Affect How Much You Can Afford
✅ Increases Your Budget
- • Higher income
- • Larger down payment
- • Lower interest rate
- • Less existing debt
- • Higher credit score
- • Co-borrower income
- • Down payment assistance
❌ Decreases Your Budget
- • Car payments
- • Student loans
- • Credit card debt
- • Higher interest rates
- • Lower credit score
- • High property taxes
- • HOA fees
📋 Real-World Examples
👩💼 Example 1: Single Professional
Profile:
- • Income: $85,000/year
- • Monthly gross: $7,083
- • Car payment: $400/mo
- • Student loans: $300/mo
- • Credit score: 720
- • Savings: $25,000
Affordability:
- • Max housing (28%): $1,983/mo
- • Max total debt (36%): $2,550/mo
- • Available for housing: $1,850/mo
- • Max home price: ~$280,000
- • Down payment (10%): $28,000
👫 Example 2: Married Couple
Profile:
- • Combined income: $150,000/year
- • Monthly gross: $12,500
- • Car payments: $600/mo
- • Student loans: $400/mo
- • Credit scores: 750/740
- • Savings: $80,000
Affordability:
- • Max housing (28%): $3,500/mo
- • Max total debt (36%): $4,500/mo
- • Available for housing: $3,500/mo
- • Max home price: ~$525,000
- • Down payment (20%): $105,000
🎖️ Example 3: Veteran (VA Loan)
Profile:
- • Income: $70,000/year
- • Monthly gross: $5,833
- • Car payment: $350/mo
- • No other debt
- • Credit score: 680
- • VA eligible (0% down!)
Affordability:
- • Max housing (28%): $1,633/mo
- • Max total debt (41% VA): $2,392/mo
- • Available for housing: $2,042/mo
- • Max home price: ~$320,000
- • Down payment: $0 (VA loan!)
💡 How to Afford More House
1. Pay Down Debt First
Every $100/month in debt payments reduces your home buying power by ~$15,000. Pay off car loans and credit cards before buying.
2. Improve Your Credit Score
A higher credit score = lower interest rate = more house for the same payment.See how to boost your score
3. Save a Larger Down Payment
More down = smaller loan = lower monthly payment = qualify for more house. Plus, 20% down eliminates PMI.
4. Use Down Payment Assistance
FREE money for your down payment! Over $2.5B goes unclaimed annually.Find programs in your state
5. Add a Co-Borrower
A spouse, partner, or family member's income can significantly increase your buying power.
❓ Affordability FAQ
How much house can I afford on $100K salary?
With a $100,000 salary, you can typically afford a home between $300,000-$400,000, depending on your debts, down payment, and interest rate. Using the 28% rule, your max housing payment would be ~$2,333/month.
What's the 28/36 rule?
The 28/36 rule says your housing costs should be ≤28% of gross income (front-end DTI), and total debt payments should be ≤36% of gross income (back-end DTI).
How much should I put down on a house?
20% down is ideal (no PMI), but many buyers put down 3-10%. FHA requires 3.5%, VA and USDA allow 0%. The right amount depends on your savings and goals.
Does my spouse's income count?
Yes! If you apply together, both incomes count toward qualification. However, both credit scores and debts are also considered.
🏠 Ready to Find Out Your Exact Budget?
Stop guessing! Get pre-approved and know exactly how much house you can afford. It only takes 2 minutes and won't affect your credit.