How Much House Can I Afford on a US Salary
“How much house can I afford?” is the first question every buyer asks, and the worst place to get the answer is from a lender’s pre-approval letter. That letter tells you the most a bank is willing to risk — not what fits your life. The classic 28/36 rule gives you a far more honest number, and this guide shows you how to run it on your own salary, with real worked examples, the hidden costs listings leave out, and the comfort checks that separate a smart purchase from a stressful one.
The 28/36 rule, explained simply
The rule has two halves. The front-end ratio says your total monthly housing payment — principal, interest, property taxes, homeowners insurance, and HOA dues — should stay at or below 28% of your gross monthly income. The back-end ratio says housing plus all your other monthly debt payments (car loans, student loans, credit card minimums) should stay at or below 36% of gross monthly income. Your real ceiling is whichever half is tighter.
Why gross income? Because lenders underwrite on gross, and consistency matters more than philosophy here. Yes, taxes take a bite before the money reaches you — that is precisely why 28/36 is a ceiling and not a target. Many households feel genuinely comfortable several points below it.
Worked example: a $75,000 salary
Take a buyer earning $75,000 a year — $6,250 a month gross. The front-end rule allows a housing payment of $1,750. Suppose they also carry a $400 car payment. The back-end rule allows total debts of $2,250, leaving $1,850 for housing, so the front-end rule binds at $1,750 a month.
Now convert payment to price. With $60,000 saved for a down payment, a 6.5% thirty-year mortgage, and taxes, insurance, and HOA running about 1.6% of the home’s value per year, that $1,750 monthly housing budget supports a home of roughly $255,000 to $265,000. Notice what moved the number: not the salary alone, but the down payment, the rate, and the tax load. Change the tax load to 2.4% — common in high-tax states — and the same income supports noticeably less house. This is why two buyers with identical salaries in different states can afford very different homes.
You can run your own numbers in seconds with our free house affordability calculator, which solves the price from your income, debts, down payment, rate, and tax load all at once.
The costs the listing price hides
First-time buyers routinely budget for the mortgage and forget the entourage. Property taxes in the US range from under 0.4% of value in Hawaii to over 2% in New Jersey and Illinois. Homeowners insurance has climbed sharply — $150 to $300 a month is now ordinary in many states, and far more in hurricane and wildfire zones. HOA dues in condos and newer subdivisions can add $200 to $500 a month, and lenders count them in your ratios even when buyers forget to.
Then there is maintenance. A durable rule of thumb is 1% of the home’s value per year — $2,600 a year on a $260,000 home — and it arrives in lumps: a roof, a furnace, a sewer line. None of this means you should not buy. It means the 28% figure should include the escrowed costs, and your cash reserves after closing should still cover several months of life going wrong.
How lenders bend the rule — and why you should not
Modern underwriting often approves back-end ratios of 45% or even 50% for borrowers with strong credit and reserves. That flexibility exists because lenders are optimizing for loans that perform statistically, not for your stress level. A household at 45% has very little slack: one car repair goes on a credit card, one income dip becomes a crisis. The buyers who sleep well bought at the payment they chose, not the payment they were offered.
A useful personal test: live on the proposed housing payment for three months before you buy. Bank the difference between it and your current rent. If those three months feel fine and your savings grew, the payment fits. If they feel tight, the house at that price does not — no matter what any calculator or lender says.
Improving your number before you buy
Three levers move your affordable price more than anything else. First, debts: paying off a $400 car loan does not just free $400 — under the back-end rule it can raise your housing room by the same amount, which at today’s rates is worth roughly $60,000 of house. Second, the down payment: more cash down shrinks the loan and may drop you below the 20% threshold that eliminates PMI entirely, saving a monthly premium on top. Third, credit: a score improvement that earns you even half a point less on the rate is worth tens of thousands in price terms. Our guides on credit utilization and removing PMI cover the cheapest ways to move both.
Finally, remember that affordability is not a one-time calculation. Rates move, incomes grow, and debts disappear. Re-run your numbers whenever one of those changes materially — a paid-off car or a half-point drop in mortgage rates can responsibly move your price range by tens of thousands of dollars without changing your salary at all.
Frequently asked questions
The FAQ below covers the questions buyers ask most: whether the rule uses net or gross income, how it treats two incomes, and what changes for self-employed buyers. Start with the calculator, sanity-check with the three-month test, and let the bank’s maximum be background information — never the budget.
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