How Much House Can I Afford? A Realistic Answer
There are two answers to this question and they differ by a lot. The first is what a lender will approve. The second is what leaves you able to keep saving, absorb a setback and enjoy living there.
This guide covers both, and explains why the gap between them is where most house-poor households are made.
Key takeaways
- Lender approval is a ceiling, not a recommendation — it ignores childcare, retirement saving and maintenance.
- The 28/36 rule uses gross income; applying it to take-home pay understates by roughly 30%.
- Every $100 of monthly debt eliminated adds roughly $15,000 to your borrowing capacity.
- Property tax varies by more than 7× between states and changes affordability dramatically.
What lenders actually calculate
Underwriting runs on two ratios. The front-end ratio caps housing costs at 28% of gross monthly income. The back-end ratio caps all monthly debt payments, including housing, at 36% — though many lenders stretch this to 43%, and further with compensating factors like large reserves.
Both use gross income, which is a significant part of why approvals feel high. On a $100,000 salary the 28% figure is $2,333 a month, but take-home pay is closer to $6,300 a month, making that payment 37% of the money actually arriving.
What the ratios leave out
Childcare, which in many metros exceeds a mortgage payment. Retirement contributions, which the ratios treat as entirely optional. Commuting costs, which frequently rise when people buy further out to afford more house. And maintenance, budgeted at roughly 1% of home value annually — $4,250 a year on a $425,000 home, and higher on older properties.
None of these appear in an approval. All of them appear in your life. This is why buyers who purchase at their maximum are reliably the ones who stop contributing to retirement and carry credit card balances through minor emergencies.
What you can afford by salary
These figures assume current rates near 6.65%, a 10% down payment, no other debt, and a 1.1% property tax rate. The conservative column holds housing to 22% of gross income rather than 28%.
- $60,000 salary — lender ceiling around $215,000; comfortable around $170,000
- $80,000 salary — lender ceiling around $290,000; comfortable around $228,000
- $100,000 salary — lender ceiling around $365,000; comfortable around $287,000
- $150,000 salary — lender ceiling around $555,000; comfortable around $436,000
- $200,000 salary — lender ceiling around $745,000; comfortable around $585,000
The three levers that move your ceiling
They are not equally effective. Reducing monthly debt is the most powerful per dollar — every $100 of eliminated monthly payment adds roughly $15,000 to borrowing capacity, because it frees back-end ratio capacity directly. Paying off a car loan before applying is often worth more than saving the same amount for a down payment.
Raising your credit score is second, worth 0.4–0.6 percentage points between a 680 and a 760. Increasing the down payment is third: it helps, but a dollar of down payment buys roughly a dollar of house, whereas a dollar of eliminated monthly debt buys many times that.
Common questions
How much house can I afford on a $100,000 salary?
Roughly $330,000–370,000 under the 28% rule at current rates with 15% down, depending on your property tax rate. A more comfortable target that preserves retirement saving is closer to $280,000–320,000. Existing car or student loan payments reduce both figures.
What income do I need for a $500,000 house?
At 6.65% with 10% down, a $500,000 home costs roughly $3,850 a month all-in. The 28% rule implies about $165,000 of gross household income, or around $130,000 stretching to the 36% back-end limit with no other debt.
Does the 28/36 rule still apply at high incomes?
Less rigidly. At $400,000 of income, 28% is $9,333 a month and the remaining income comfortably covers everything else, so lenders and borrowers alike allow higher ratios. The rule is most binding in the middle, where a high housing share genuinely crowds out saving.