How Much House Can I Afford on My Salary?

Q: Is it better to put 20% down or less?

20% down eliminates PMI and lowers your monthly payment -- that's real savings. But if saving 20% means waiting several more years while prices rise, a smaller down payment (5-10%) can make more sense. On a $300K home, PMI typically runs $100 to $250/month and drops off once you reach 20% equity. Run the numbers both ways for your planned ownership timeline.

Be honest — you’ve done the midnight Zillow scroll. Favoriting houses, mentally arranging furniture, quietly panicking about the prices. You’re not alone. The National Association of Realtors says 97% of homebuyers in 2024 used the internet during their search, and most of them had zero idea what they could actually afford before they started browsing. That’s how people end up heartbroken at open houses — or worse, buying more house than they can handle. Let’s fix that with real numbers.

The 28/36 Rule: Start Here

This is the guideline mortgage lenders have used forever, and it’s still the best starting point.

28% Rule: Your monthly housing costs (mortgage payment, property taxes, homeowner’s insurance — the whole PITI package) shouldn’t exceed 28% of your gross monthly income.
36% Rule: Your total monthly debt payments — housing plus car loans, student loans, credit card minimums, everything — shouldn’t exceed 36% of gross monthly income.

Real example. You make $75,000/year. Gross monthly income: $6,250.

28% of $6,250 = $1,750 max housing cost
36% of $6,250 = $2,250 max total debt

Now say you’ve got a $350 car payment and $200 in student loans. That’s $550/month in existing debt. Under the 36% rule, your max total is $2,250, leaving $1,700 for housing. The 28% rule says $1,750. You use whichever’s lower — so $1,700.

At a 6.75% rate on a 30-year fixed mortgage, $1,700/month supports a mortgage of about $262,000. Add a 10% down payment ($29,000), and you can afford a home around $291,000. That’s your realistic number on $75K with $550 in existing debt.

Want your exact figure? Plug your numbers into our Mortgage Affordability Calculator — salary, debts, down payment, interest rate, everything.

What Different Salaries Can Actually Buy

These assume a 30-year fixed at 6.75%, 10% down, $300/month for property tax and insurance, and $400/month in existing debt. All using the 28/36 rule.

$50,000 salary: Gross monthly income of $4,167. Max housing: $1,167. After taxes and insurance, your mortgage budget is about $867, supporting a loan of ~$133,500 and a home price around $148,000. You can still find a solid 2-3 bedroom in parts of Ohio, Indiana, or Texas at that price.

$75,000 salary: Home price around $291,000, as we calculated. Realistic in Charlotte, San Antonio, Nashville suburbs, or Tampa’s outer neighborhoods.

$100,000 salary: Gross monthly: $8,333. Max housing: $2,333. Mortgage budget: $2,033. Home price: roughly $348,000.

$125,000 salary: Max housing: $2,917. Mortgage budget: $2,617. Home price: about $448,000.

$150,000 salary: Max housing: $3,500. Mortgage budget: $3,200. Home price: around $548,000.

$150,000 combined (dual income): Same ratios as a single $150K earner. Home price around $548,000 with the same debt and down payment assumptions.

Important caveat: these are conservative estimates. Some lenders will approve you up to 43% or even 50% debt-to-income for FHA and certain conventional loans. Just because you qualify doesn’t mean you should borrow that much. The 28/36 rule exists to keep you comfortable, not house-poor. There’s a massive difference between “the bank says I can” and “I can actually live my life.”

The Hidden Costs Nobody Warns First-Time Buyers About

The mortgage payment’s just the beginning. Honestly, this is where most first-time buyers get blindsided.

Property taxes. National average: about 1.1% of assessed value per year. On a $350,000 home, that’s $3,850/year or $321/month. But the range is wild. New Jersey’s effective rate is 2.23% — $7,805/year on a $350K home, or $650/month. Hawaii? Just 0.32%, or $93/month. Property taxes alone can make a $350K home in Jersey feel like a $450K home.

Homeowner’s insurance. National average: about $1,700/year ($142/month) for a $350K home. But if you’re in Florida or Louisiana? Premiums easily exceed $4,000/year. Some Florida homeowners are paying $6,000 to $8,000 annually in 2025. That’s not a typo.

PMI (Private Mortgage Insurance). Put down less than 20%? You’re paying PMI — typically 0.5% to 1.5% of the loan per year. On a $300,000 mortgage, that adds $125 to $375/month until you hit 20% equity. It’s just gone money, protecting the lender, not you.

HOA fees. Condo, townhouse, planned community? HOA fees run $100 to $500+/month. Average is about $250. Covers exterior maintenance and amenities, but it directly reduces the mortgage you can afford.

Maintenance and repairs. Budget 1% to 2% of the home’s value per year. On a $350K home: $3,500 to $7,000 annually. Older homes skew higher. Bankrate found that the average first-year homebuyer spends about $6,000 on unexpected repairs. Surprise! Your water heater’s from 2003.

Closing costs. One-time hit at purchase: 2% to 5% of the home price. On $350K, that’s $7,000 to $17,500. Appraisal, title insurance, attorney fees, recording fees, lender origination — it adds up fast.

Utilities. Bigger house = bigger bills. Average US household: about $400/month for electricity, gas, water, sewer, and trash. Larger homes in extreme climates can clear $600/month easily.

Down Payment: How Much Do You Actually Need?

The old “save 20% first” advice sounds responsible, but let’s be real — on a $350,000 home, that’s $70,000. For most people paying rent at the same time? Nearly impossible. The good news is you’ve got options.

Conventional loans: 3% down minimum for first-time buyers through Fannie Mae’s HomeReady or Freddie Mac’s Home Possible. On $350K, that’s just $10,500. You’ll pay PMI until you reach 20% equity, but it gets you in the door years sooner.

FHA loans: 3.5% down with a 580+ credit score. On $350K: $12,250. FHA has mortgage insurance for the life of the loan (unless you refinance to conventional later). Upfront premium: 1.75% of the loan. Annual premium: 0.55%.

VA loans: 0% down for eligible veterans, active-duty service members, and surviving spouses. No PMI. Honestly, this might be the single best mortgage product that exists. One-time funding fee of 1.25% to 3.3% depending on service history.

USDA loans: 0% down for homes in eligible rural and suburban areas. Income limits apply (generally 115% of area median income). 1% upfront guarantee fee and 0.35% annual fee.

The tradeoff is straightforward: less down = bigger mortgage = higher monthly payments = more total interest. Putting 5% down on a $350K home instead of 20% adds roughly $55,000 in total interest over 30 years at 6.75%. But if the alternative is waiting 5 more years while home prices climb 3% to 5% annually, buying sooner with less down often wins anyway.

Your take-home pay matters more than your salary for figuring out what you can afford. Our guide on how tax brackets actually work shows you how much of your gross income you’re really keeping.

5 Ways to Afford More House Without Going Broke

If the numbers above put your dream home out of reach, don’t just stretch your budget. Try these instead.

1. Kill your existing debt first. Every $100/month in debt payments reduces your max home price by roughly $15,400 under the 28/36 rule at current rates. Pay off a $400/month car loan before applying for a mortgage and you unlock an additional $61,600 in buying power. That could be the difference between a place you settle for and a place you actually want.

2. Get your credit score up. The spread between a 680 score and a 760 score on a $300,000 mortgage can be 0.5% to 1% in interest rate. Going from 7.25% to 6.50% saves you $178/month and $64,000 over the life of the loan. Pull your credit reports from all three bureaus, dispute any errors, get credit card utilization below 30%, and don’t open new accounts for 6 months before applying. Chase, Capital One, and Discover all offer free credit score monitoring.

3. Consider a 15-year mortgage. A 15-year at 5.90% on $300K means $2,516/month — higher than the $1,946 on a 30-year at 6.75%. But you save $153,000 in total interest and own the house free and clear in half the time. If $2,516 fits within your 28% ratio, seriously think about it.

4. Look 15-20 minutes outside the trendy neighborhoods. Areas with new infrastructure, school improvements, or commercial development often appreciate faster than established areas. You get more square footage today and better equity growth tomorrow. The hot zip code from 5 years ago was probably the “up and coming” neighborhood 10 years ago.

5. House hack. Buy a duplex, triplex, or home with a rentable basement unit. Live in one unit, rent the others. Even $800/month in rental income effectively boosts your buying power by $123,000. And FHA loans let you buy up to a 4-unit property with just 3.5% down, as long as you live in one unit. This is probably the most underused strategy on this list.

Try different scenarios in our Mortgage Affordability Calculator to see how each strategy changes your numbers.

Frequently Asked Questions

How much house can I afford on a $70,000 salary?

Using the 28/36 rule with a 10% down payment, 6.75% rate, and $400/month in existing debt, you’re looking at a home around $265,000. Max monthly housing cost: about $1,633, supporting a mortgage of roughly $238,000. Your actual number depends on credit score, total debt, local property taxes, and down payment size.

Is it better to put 20% down or less?

20% down eliminates PMI and lowers your monthly payment — that’s real savings. But if saving 20% means waiting several more years while prices rise, a smaller down payment (5-10%) can make more sense. On a $300K home, PMI typically runs $100 to $250/month and drops off once you reach 20% equity. Run the numbers both ways for your planned ownership timeline.

What credit score do I need to buy a house?

Conventional mortgages require a minimum 620, but you’ll get much better rates at 740+. FHA loans accept scores as low as 580 with 3.5% down (or 500 with 10% down). VA and USDA don’t have official minimums, but most lenders want at least 620. Every 20-point score increase can shave 0.125% to 0.25% off your rate, saving thousands over the loan’s life.

Should I buy a house or keep renting?

Depends on how long you’ll stay put. Buying generally makes sense if you’re staying at least 5 to 7 years — that gives you time to recoup closing costs and build equity. In expensive markets where rent is way cheaper than owning, renting and investing the difference can actually build more wealth. In affordable markets where mortgage payments are close to rent, buying usually wins long-term.

How much should I save before buying a house?

More than just the down payment. You’ll need 2-5% of the home price for closing costs, 3-6 months of expenses as an emergency fund, and $5,000-$10,000 for move-in costs and early repairs. For a $300K home with 10% down: roughly $30,000 down payment + $9,000 closing costs + $15,000 emergency fund + $7,500 for moving and repairs = about $61,500 total. It’s a lot, but going in underprepared is worse.

Know Your Number Before You Start Looking

Figuring out your budget should come before you ever set foot in an open house. Not after you fall in love with a place you can’t afford. The math isn’t complicated: follow the 28/36 rule, account for all the hidden costs, and be honest about what monthly payment lets you live comfortably — not just survive.

Start with our Mortgage Affordability Calculator. Takes less than a minute. You’ll get a clear, realistic price range based on your actual salary, debts, and down payment. That number is your anchor for every decision that follows.