How much house can I afford with my salary?

Generally, you can afford a house that costs 3-5 times your annual salary, depending on your debts and down payment. Use the 28/36 rule: spend no more than 28% of gross monthly income on housing and 36% on total debt payments.

What is the 28/36 rule for home affordability?

The 28/36 rule says housing costs shouldn't exceed 28% of gross monthly income, and total debt payments shouldn't exceed 36%. For example, with $75,000 annual income ($6,250 monthly), housing should be under $1,750 and total debts under $2,250.

How much down payment do I need to afford a house?

Down payments range from 0% (VA loans) to 20% (conventional without PMI). FHA loans require 3.5%, conventional loans start at 3%. Higher down payments reduce monthly costs but require more upfront cash.

Should I use 3x or 5x my income to determine affordability?

Use 3x income for conservative affordability with room for other financial goals. Use up to 5x income if you have minimal debt, excellent credit, and stable income. Consider your complete financial picture, not just income multiples.

What if I have student loans or credit card debt?

Existing debt reduces how much house you can afford. Lenders count minimum monthly debt payments against your 36% total debt ratio. Pay down high-interest debt before buying to increase your home buying power.

How much should I save for closing costs?

Budget 2-5% of home price for closing costs. On a $300,000 home, expect $6,000-15,000 in closing costs including loan origination, title insurance, appraisal, inspection, and prepaid taxes and insurance.

Can I afford a house if I'm self-employed?

Self-employed buyers can qualify but need 2 years of tax returns and consistent income documentation. Lenders may average your income over 2 years, so stable earnings history is crucial for determining affordability.

What other costs should I consider beyond the mortgage?

Budget for property taxes (1-2% annually), homeowner's insurance ($1,200+ annually), maintenance (1-3% of home value annually), utilities, and potential HOA fees. These add $300-800+ monthly to your housing costs.

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How Much House Can I Afford?

Calculate your true home buying budget using proven affordability rules and current market conditions.

Last Updated: September 7, 2025 | Reviewed by: Sabina Shao, CEO & Financial Education Expert

Data Sources: Federal Housing Administration Guidelines, Consumer Financial Protection Bureau, National Association of Realtors

Home Affordability Calculator

Annual Gross Income ($)

Before taxes - all income sources

Monthly Debt Payments ($)

Credit cards, loans, minimum payments only

Other Monthly Expenses ($)

Food, utilities, transportation, etc.

Down Payment (%)

Interest Rate (%)

Current 30-year fixed rates

Credit Score Range

Current Mortgage Rates (September 2025)

Latest mortgage rates showing significant drops from early 2025 highs

Loan Type	Rate	Change
30-year fixed	6.5%	-0.54% from Jan 2025
15-year fixed	5.6%	-0.67% from Jan 2025
30-year jumbo	6.75%	-0.45% from Jan 2025
FHA 30-year	6.25%	-0.62% from Jan 2025

Last updated: 2025-09-05 | Source: Freddie Mac, Federal Reserve

Home Affordability Key Takeaways

The 28/36 rule: housing costs ≤28% of gross income, total debt ≤36% of gross income
Home price should typically be 3-5 times your annual salary depending on debt and down payment
Higher down payments reduce monthly costs but require more upfront cash - find your balance
Don't forget closing costs (2-5% of home price) and ongoing expenses like maintenance and taxes
Pre-approval gives you exact buying power and strengthens your offers in competitive markets
Consider your complete financial picture, not just what lenders approve - leave room for other goals

Home Affordability Quick Facts

Average Home Price 2025:$420,000

National median home price

Minimum Down Payment:3-3.5%

Conventional (3%) or FHA (3.5%) loans

Closing Cost Range:2-5%

Of home purchase price

Good Debt-to-Income:≤36%

Total monthly debt payments to gross income

Home Affordability at a Glance

Income Requirements:Generally need 25-33% of home price as annual income. Higher for expensive areas, lower with minimal debt.

Down Payment Options:VA: 0%, USDA: 0%, FHA: 3.5%, Conventional: 3-20%. Higher down = lower monthly payment.

Monthly Budget Breakdown:Principal & Interest (~75%), Property Taxes (~15%), Insurance (~7%), PMI if <20% down (~3%)

Additional Costs:Moving expenses, immediate repairs, furniture, utility setup, maintenance fund (1% of home value annually)

Timing Considerations:Buy when: stable job, 5+ year timeline, emergency fund intact, debt manageable, down payment saved

Smart Home Affordability Strategies

intermediate Level

1
Get pre-approved early to know your exact budget and strengthen offers - it's free and helps you shop confidently
2
Save 25% above your target budget for unexpected costs, repairs, or better opportunities
3
Consider total commuting costs when comparing home prices - a cheaper home far from work may cost more overall
4
Factor in property taxes and insurance early - they can add $300-800+ monthly and vary significantly by location
5
Don't max out your approval amount - leave room for rate increases, job changes, and other financial goals
6
Consider the 1% rule for maintenance: budget 1% of home value annually for upkeep and repairs