How Much House Can I Afford? What Your Salary Actually Buys

Every affordability answer starts from the same four things: your income, your existing debts, your down payment, and the rate. Change any one and the number moves, sometimes by tens of thousands of dollars.

What follows is the arithmetic lenders actually use, the price each salary buys at 6.76% — the 30-year average on 10 September 2026 — and the costs that hide inside a monthly payment until the first bill arrives.

Key takeaways

• Approval and affordability are different numbers. The first is the lender's risk appetite; the second is your life.
• The 28/36 rule is the standard: housing under 28% of gross income, all debt under 36%.
• At 6.76% with 20% down, $70,000 of salary buys roughly a $250,000 house — and $100,000 buys about $357,000.
• Every $100 a month of other debt costs you about $15,000 of house. A car payment is the most expensive thing in most applications.
• The mortgage payment is not the cost. Property tax, insurance, PMI and HOA dues can add 25% on top before a single repair.

Two numbers, and only one of them is yours

What you are approved for is the most a lender will risk. What you can afford is what still works when the roof goes. Those are not the same figure, and nobody in the transaction is paid to tell you the difference.

A lender is pricing the chance you stop paying. It is not pricing your childcare, your retirement contributions, the job you would like to leave, or the year your income dips. Its number is the ceiling of what is lendable, and it is quoted to you as though it were a recommendation.

Treat approval as a boundary rather than a target. The useful question is not what will they give me, but what payment would I still be comfortable making in a bad year — and then working back from that to a price.

How a lender actually decides

Underwriting runs on debt-to-income ratio, and the long-standing shorthand is the 28/36 rule: housing costs should stay under 28% of gross monthly income, and all monthly debt payments under 36%.

Housing here means the whole payment — principal, interest, property tax, insurance and any HOA dues, which lenders bundle as PITI. The back-end 36% adds car loans, student loans, credit card minimums and child support. It does not count utilities, groceries, childcare or anything else you actually spend money on.

Compensating factors means cash reserves, a high credit score or a large down payment. The gap between 36% and 50% of income is enormous — on $70,000 that is roughly $820 a month, or about $125,000 of house. The rule has not changed; what lenders will stretch to has.

One more boundary worth knowing: the 2026 conforming loan limit is $832,750 in most of the country, rising to $1,249,125 in high-cost areas. Above it you are in jumbo territory, where the underwriting is stricter and the rate usually higher.

What your salary actually buys

The table below applies the 28% rule at 6.76% over 30 years, with 20% down, property tax at 1.1% and insurance at 0.5% of value. No other debts, no HOA.

Running it the other way is often more useful, because most people start from a house rather than a salary. A $300,000 home needs about $84,000 of income under the same assumptions. $400,000 needs about $112,000. A $1,000,000 home needs roughly $280,000.

Here is the sharpest version of that. Every $100 a month of other debt costs you about $15,000 of house. An $800 monthly debt load on a $70,000 salary pulls the affordable price from $250,000 down to roughly $199,000 — the same buyer, the same income, $51,000 less house.

The costs the payment hides

A quote that covers only principal and interest understates the real payment by a wide margin. Four things sit on top, and three of them never go away.

• Property tax — commonly around 1% to 1.5% of value a year, but it ranges from under 0.3% to over 2% by state. On a $300,000 home at 1.1% that is $275 a month.
• Homeowner's insurance — roughly 0.5% of value a year as a planning figure, higher on the coasts and in wildfire country.
• PMI — required on most conventional loans under 20% down, typically around 0.5% of the loan a year. It is cancellable; the tax and insurance are not.
• HOA dues — zero for many homes and several hundred a month for others. Lenders count them in full against your ratios.

Taken together these commonly add 20% to 30% on top of principal and interest. That is the difference between a payment you modelled and the one that leaves your account, and it is the single most common reason a budget that looked fine in a spreadsheet does not survive the first year.

Then there is maintenance, which no lender counts and every owner pays. A widely used planning figure is 1% of the home's value a year — $3,000 on a $300,000 house, not spent evenly but spent eventually.

The down payment is the lever you control

Of the four inputs, the rate is set by the market, your income moves slowly and your debts take time to clear. The down payment is the one you can change this year, and it works on the price twice over.

Each additional dollar down is a dollar less borrowed, so the payment falls — and crossing 20% removes PMI entirely, which on a $250,000 loan is roughly $104 a month released back into your ratios. That freed payment buys about $16,000 more house on its own, which is why the last few thousand of a deposit are worth more than the first.

It does not follow that you should drain every account to reach 20%. A buyer who hits the threshold with nothing left for closing costs, a moving van and a failed water heater has bought a payment they cannot absorb a surprise around. Work the trade-off through the down payment calculator and keep a reserve on the other side of it.

A $70,000 salary, worked through

Add a $400 car payment and a $400 student loan and the back-end rule takes over: 36% of $5,833 is $2,100, less $800 of debt leaves $1,300 for the whole housing payment rather than $1,633. The affordable price falls to about $199,000. Nothing about the buyer changed except what they already owed.

Common mistakes

Shopping at the top of the approval. The pre-approval letter is a ceiling, and treating it as a budget means every offer you make is the most you could possibly pay. Decide your number first, and tell your agent that number rather than the approval.

Budgeting on principal and interest alone. It is the figure most calculators lead with and it is 70% to 80% of the real payment. Always model PITI.

Taking on a car loan during the process. A $600 payment costs roughly $92,000 of buying power and can fail an approval outright. Lenders re-pull credit before closing; a new loan between approval and completion has sunk plenty of purchases.

Forgetting closing costs. They typically run 2% to 5% of the price and are due in cash on top of the deposit — $6,000 to $15,000 on a $300,000 home. Work them out with the closing costs calculator before you fix your deposit.

Assuming today's payment is permanent. Property tax is reassessed and insurance premiums have risen sharply in many states. A payment that is comfortable at 28% today has less room than it looks if both climb.

Next steps

• Work out your own figure with the affordability calculator below, using your real debts rather than round numbers.
• Model the full payment, not just the loan, with the mortgage calculator.
• Decide the deposit and check what is left afterwards using the down payment calculator.
• Budget the cash you need on completion day with the closing costs calculator.
• Then get pre-approved — and write your own number on a piece of paper before the letter arrives.