Question 1

How much house can I afford on a $85,000 salary?

Accepted Answer

On an $85,000 annual salary, you can typically afford a home priced between $200,000 and $280,000 using the 28% front-end DTI rule. With a 7% interest rate, 20% down payment, and no existing debts, the max PITI payment of $1,983/month supports roughly a $255,000 home. Your actual number depends on down payment, existing debts, property taxes, and interest rate.

Question 2

What is the 28/36 rule for home affordability?

Accepted Answer

The 28/36 rule is the standard lenders use: your total housing costs (principal, interest, property taxes, insurance — called PITI) should not exceed 28% of your gross monthly income (front-end DTI), and all monthly debt payments combined (housing + car loans + student loans + credit cards) should not exceed 36% of gross monthly income (back-end DTI). Exceeding these thresholds makes mortgage approval harder and increases financial stress risk.

Question 3

How much down payment do I need to buy a house?

Accepted Answer

Conventional loans require a minimum 3–5% down payment, but you'll pay private mortgage insurance (PMI) if you put down less than 20%. FHA loans require just 3.5% down with a 580+ credit score. VA loans (for veterans) and USDA loans (rural areas) can require 0% down. A larger down payment reduces your loan amount, monthly payment, and whether you pay PMI — which typically costs 0.5–1.5% of the loan per year.

Question 4

What counts as debt in the back-end DTI calculation?

Accepted Answer

Back-end DTI includes all monthly minimum debt payments: mortgage PITI, car loans, student loans, personal loans, credit card minimum payments, child support, and alimony. It does NOT include utilities, groceries, subscriptions, or other living expenses. Medical bills in collections may also be counted by some lenders.

Question 5

Does a higher interest rate significantly affect how much house I can afford?

Accepted Answer

Yes — interest rate has a major impact. At a 5% rate, a $300,000 loan costs about $1,610/month in P&I. At 7%, that same loan costs $1,996/month — a $386 difference. That extra payment reduces the max home price you can qualify for under the 28% DTI rule by roughly $55,000–$65,000. Even a 0.5% rate difference can shift affordability by $15,000–$25,000 in home price.

Home Affordability Calculator

Your Details

The Rule of 2.5x — A Quick Sanity Check

Compare mortgage rates

Frequently Asked Questions