How Much House Can I Afford in 2025?
With mortgage rates around 7%, the math of home affordability has changed significantly. Here's exactly how much house you can afford at every income level — with real numbers, not vague rules of thumb.
The Quick Answer: Home Price by Salary
The table below uses the 28% rule (housing costs ≤ 28% of gross income), a 7.1% mortgage rate, 20% down payment, 1.2% property tax, and $2,000/year homeowners insurance. Adjust these in our free calculator for your exact situation.
| Annual Salary | Max Home Price | Monthly Payment | Down Payment (20%) | Monthly Income Used |
|---|---|---|---|---|
| $50,000 | $140,000–$160,000 | $1,167/mo | $28,000–$32,000 | 28% |
| $75,000 | $210,000–$240,000 | $1,750/mo | $42,000–$48,000 | 28% |
| $100,000 | $280,000–$320,000 | $2,333/mo | $56,000–$64,000 | 28% |
| $125,000 | $350,000–$400,000 | $2,917/mo | $70,000–$80,000 | 28% |
| $150,000 | $420,000–$480,000 | $3,500/mo | $84,000–$96,000 | 28% |
| $200,000 | $560,000–$640,000 | $4,667/mo | $112,000–$128,000 | 28% |
| $250,000 | $700,000–$800,000 | $5,833/mo | $140,000–$160,000 | 28% |
The 28/36 Rule Explained
Lenders use two key ratios to decide how much mortgage you qualify for:
The 28% Front-End Ratio
Your total housing payment (mortgage principal + interest + property taxes + insurance, often called PITI) should not exceed 28% of your gross monthly income. On a $100,000 salary, that's $8,333/month × 28% = $2,333 maximum housing payment.
The 36% Back-End Ratio (DTI)
Your total debt — housing plus all other monthly debt payments (car loans, student loans, minimum credit card payments) — should not exceed 36% of gross monthly income. If you have $500/month in car and student loan payments, your housing budget drops by $500.
Lenders today often approve up to 43–50% DTI (Fannie Mae allows 50% in some cases), but staying at 36% or below keeps your finances healthy and avoids being "house poor."
How Mortgage Rate Affects Affordability
Rate changes dramatically impact affordability. Here's how your monthly payment changes on a $300,000 loan at different rates:
| Rate | Monthly P&I | Total Interest (30yr) | vs 3% rate |
|---|---|---|---|
| 3.0% | $1,265 | $155,332 | — |
| 5.0% | $1,610 | $279,767 | +$345/mo |
| 6.5% | $1,896 | $382,633 | +$631/mo |
| 7.1% | $2,014 | $425,076 | +$749/mo |
| 8.0% | $2,201 | $492,387 | +$936/mo |
Down Payment: Does 20% Still Make Sense?
The 20% down payment rule exists to avoid Private Mortgage Insurance (PMI), which costs 0.5–1.5% of the loan amount annually. On a $350,000 loan, that's $1,750–$5,250/year ($146–$438/month) until you reach 20% equity.
With today's home prices, many buyers put down less than 20%. FHA loans allow 3.5% down with a 580+ credit score. Conventional loans allow 3% down. The trade-off: higher monthly payments and PMI costs. If you'd have to completely drain your emergency fund to put 20% down, a lower down payment is often the smarter choice.
Calculate Your Exact Affordability
Enter your income, debts, down payment, and local rates for a personalized answer in seconds.
Use the Free Calculator →Affordability by City: Same Salary, Different Reality
A $120,000 salary buys very different homes depending on location. Local property taxes, home prices, and insurance vary enormously:
| City | Median Home Price | Salary Needed | Property Tax Rate |
|---|---|---|---|
| Cleveland, OH | $165,000 | ~$55,000 | 1.8% |
| Atlanta, GA | $380,000 | ~$130,000 | 1.0% |
| Austin, TX | $490,000 | ~$170,000 | 1.9% |
| Denver, CO | $545,000 | ~$185,000 | 0.6% |
| Los Angeles, CA | $860,000 | ~$290,000 | 1.1% |
| New York City, NY | $780,000 | ~$265,000 | 0.9% |
| San Francisco, CA | $1,200,000 | ~$405,000 | 0.7% |