How much house can you really afford?

Most affordability calculators give you one number and call it a day. Real underwriting doesn't work that way — it works off a range, and where you land in that range depends almost entirely on your other debt, your credit, and which loan program you end up in. Here's the math for all three tiers, by salary.

The three tiers lenders actually use

The "28/36 rule" you'll see everywhere online is real, but it's the conservative floor — not where most approvals land. If you want a single honest takeaway from this page: the Typical tier is the one that matches how most deals actually get underwritten, and it's a front-end number, which is why it holds steady even when other debt enters the picture.

How much house you can afford, by salary

Assumptions: 6.5% 30-year fixed rate, 20% down payment, and combined property tax + insurance estimated at about 1.35% of home price annually. The Maximum tier assumes minimal other monthly debt — a car payment or student loan will pull it down. The Typical tier is front-end only, so it's largely unaffected by other debt until that debt gets fairly high (see the debt-to-income section below). If 20% down isn't realistic for you — it isn't for most first-time buyers — see the down payment breakdown below, since it changes this math in a way that actually works in your favor.

Deep-dive breakdowns for each salary band are linked under "Start here" below.

What actually moves your number

Interest rate

Rate is the single biggest lever. On a $400,000 loan, the difference between 6.5% and 7.5% is roughly $270 more per month — about $34,000 in borrowing power reclaimed just by dropping one point.

Down payment

Here's the number most calculators bury: at the same monthly budget, dropping from 20% down to 5% down barely changes your home price, but it changes how much cash you need on day one by tens of thousands of dollars. Using our $75,000 salary example at the Typical tier ($2,375/month budget):

Notice the 5%-down and FHA options land at almost the same home price — FHA's cheaper insurance largely offsets its smaller down payment. The real decision usually isn't about price, it's about how much cash you can realistically put down today.

One honest caveat: the "cash needed" figures above cover the down payment only. Real cash to close usually includes two more pieces — see below.

The three buckets of cash to close

Every home purchase involves three separate pots of money, and lumping them together is where first-time buyers get surprised at the closing table:

• Down payment — starts at 3.5% for FHA, sometimes as low as 3% on certain conventional programs. This is the bucket everyone talks about.
• Closing costs — lender fees, title insurance, appraisal, and similar costs, typically 2-5% of the purchase price. These can often be rolled into the loan or negotiated as a seller concession, but they're real money either way.
• Prepaids — upfront funding for your property tax and insurance escrow account, plus a small amount of prepaid interest. Also often rolled in, but it's part of what you're actually financing.

Buckets two and three don't always require cash out of your pocket on day one — they're frequently financed into the loan or covered by seller concessions — but they still affect your loan amount, your monthly payment, and what you qualify for. Understanding all three is what separates "I got pre-approved" from "I know what I'm actually walking into."

PMI vs. FHA MIP, in plain English

PMI (Private Mortgage Insurance) applies to conventional loans when you put down less than 20%. It cancels automatically once you hit 20% equity, or you can request cancellation yourself. Rate depends heavily on credit score — roughly 0.5% to 1.5% of the loan annually.

FHA MIP (Mortgage Insurance Premium) applies to every FHA loan, regardless of down payment. It has two parts: a 1.75% upfront fee (usually rolled into the loan) plus an annual premium around 0.5-0.55%. Unlike PMI, MIP often lasts the life of the loan unless you refinance into a conventional loan later — the tradeoff for FHA's lower down payment and looser credit requirements.

Neither is a scam or a wasted payment — it's what makes low-down-payment loans possible at all. But it's real money, and it's worth understanding before you pick a loan type.

Debt-to-income ratio

This is the one people get backwards. Take a $75,000 earner with no other debt: at the Maximum tier, that's about $480,000 of buying power. Add a $500/month car payment, and that same earner drops to roughly $400,000 — an $80,000 swing from one monthly payment. But the Typical tier ($385,000) barely moves: it's a front-end-only ratio, so it doesn't factor in that car payment until other debt tops roughly $594/month for this income level. Know which tier you're actually being qualified against before you assume a new payment will cost you buying power.

Credit score

A 620 versus a 760 score can shift your rate by half a point or more — the difference between affording $375,000 and $410,000 on the exact same income. See our credit score breakdown for exactly what moves that number.

Mistakes that quietly shrink your budget

• Getting pre-qualified instead of pre-approved. Pre-qualification is a self-reported guess. Pre-approval pulls your credit and verifies income — the number sellers trust.
• Ignoring state-by-state tax and insurance differences. The same $400,000 home can carry a $250/month tax bill in one state and $700/month in another.
• Financing a car right before applying for a mortgage. New debt shows up on your credit report immediately and can cut tens of thousands off your approved loan amount overnight — mainly by pulling down the Maximum tier, since that's the one back-end debt actually touches.
• Maxing out to the Maximum tier because you technically qualify. Qualifying and being comfortable are different things — the ~47.5% ceiling is a number to know about, not a target to aim for.

Start here