- Property tax
- $253
- Home insurance
- $99
- PMI (under 20% down)
- $126
- HOA dues
- $0
Income is the cap here, not your debts: the 28% rule puts $2,333 of your $8,333 a month toward housing, and the 36% ceiling still has room.
This is what a lender will lend, not what you should spend — it leaves nothing for repairs, furniture or retirement. Many buyers deliberately stop well below the maximum.
What each income supports
At this week’s 6.58% 30-year fixed average, with 0.89% property tax, $500 a month of other debts and $50,000 down. The last column shows the looser FHA ratios (31/43).
| Income | Housing budget | Mortgage | Home price | FHA price |
|---|---|---|---|---|
| $60,000 | $1,300 | $168,541 | $218,541 | $252,294 |
| $80,000 | $1,867 | $231,504 | $281,504 | $307,014 |
| $100,000 | $2,333 | $291,027 | $341,027 | $372,915 |
| $125,000 | $2,917 | $365,431 | $415,431 | $455,291 |
| $150,000 | $3,500 | $439,836 | $489,836 | $537,667 |
| $200,000 | $4,667 | $588,644 | $638,644 | $702,419 |
The national median home is $360,600, which on these assumptions needs an income of about $107,000. Property tax is the line that moves this most between states — pick the state you are buying in to price it properly.
Affordability FAQ
- What income do I need to buy a $360,600 home?
- About $107,000 a year, on the assumptions this page starts from: $50,000 down, the current 6.58 percent 30-year fixed average, the national average property tax of 0.89 percent, and $500 a month of existing debts. $360,600 is the national median home value in the Census ACS. Property tax varies enough between states to move that requirement by a wide margin, so check the state page where you are buying.
- How much mortgage can I borrow on my salary?
- Lenders start from two ratios rather than a multiple of salary. The front-end ratio caps the housing payment at about 28 percent of gross monthly income, and the back-end ratio caps housing plus every other monthly debt at about 36 percent. Whichever bites first sets your limit, which is why two people on the same salary can be approved for very different amounts.
- Does the calculator use gross or net income?
- Gross — your income before tax, which is what underwriting works from. It is worth remembering that the payment comes out of your take-home pay, so the maximum a lender allows can feel considerably tighter in practice than it looks on paper.
- What counts as a monthly debt?
- Recurring obligations that appear on your credit report: car loans, student loans, personal loans, minimum credit card payments, child support and alimony. Utilities, groceries, insurance premiums and subscriptions do not count, even though they compete for the same money.
- Why does paying off a car loan raise how much I can borrow?
- Because the back-end ratio counts that payment against you. Clearing a 400 dollar car payment frees the whole 400 dollars for housing, which at typical rates supports roughly 60,000 dollars more mortgage. That is usually a faster route to a bigger budget than waiting for a raise.
- Should I borrow the maximum a lender offers?
- The maximum is an underwriting limit, not a recommendation. It assumes nothing goes wrong and leaves no room for repairs, furnishings, rising property taxes or retirement saving. Plenty of buyers deliberately stop 10 to 20 percent below the number and treat the difference as breathing room.
- How do FHA loans change the numbers?
- FHA underwriting commonly allows 31 percent for housing and 43 percent in total, and accepts down payments as low as 3.5 percent. That raises the price you qualify for, but the loan carries mortgage insurance premiums for most of its life, so the monthly cost per borrowed dollar is higher. Set the ratios to 31 and 43 in the advanced options to see the difference.
What the calculator is doing
The number a lender puts in front of you comes from two ratios, not from a multiple of your salary.
The front-end ratio limits the housing payment on its own — principal, interest, property tax, homeowner insurance, PMI and any HOA dues — to a share of gross monthly income. The back-end ratio limits that same housing payment plus every other debt you carry. Conventional underwriting typically uses 28 and 36 percent; FHA is commonly more generous at 31 and 43.
Whichever ratio bites first is your real ceiling. Someone with no debts is capped by the first rule, and their income is the binding constraint. Someone carrying a car loan and a student loan is usually capped by the second — and for them, clearing a debt raises the budget faster than a raise would.
Why the answer is a payment, not a price
Working backwards from an affordable payment to a purchase price is where most rules of thumb fall apart, because the payment is not just the loan. Property tax varies from 0.27 percent of value in Hawaii to nearly 2 percent in Illinois and New Jersey — on the same house, at the same salary, that difference alone moves what you can afford by tens of thousands of dollars. Insurance, PMI below 20 percent down, and HOA dues all take a bite out of the same budget before a single dollar reaches the mortgage.
That is why this calculator solves for the price rather than asking you to guess one, and why the tax and insurance rates sit in the advanced options: change them to the figures where you are actually buying and the answer changes with them.
The limit is not a target
Everything above describes what a lender will allow. It is not advice about what to spend. The maximum assumes your income holds, nothing breaks, and every spare dollar can go to the house. Buying somewhat below the ceiling is not timidity — it is what leaves room for the roof, the furnace and the years when the property tax assessment jumps.
Next steps
Once you have a price in mind, run the actual loan on the mortgage calculator, check what the escrow half costs where you are buying on the taxes and insurance calculator, and read how much house can I afford for the budgeting side of the same question.