How much income do you need to buy a $400,000 home?

You generally need a gross household income of about $130,000 to $140,000 to comfortably afford a $400,000 home. That assumes a 7% interest rate, 10% down on a 30-year fixed loan, and total monthly PITI of roughly $3,000 to $3,200, which keeps you near the 28% housing ratio.

How much house can I afford with an $80,000 salary?

On an $80,000 gross annual salary, most buyers can comfortably afford a home priced between $240,000 and $320,000. Using the 28% housing ratio, your maximum monthly housing payment (PITI) is roughly $1,867. At a 7% interest rate with 10% down, that supports a purchase price of approximately $270,000 to $290,000. Down payment assistance programs in your state can reduce the cash needed upfront.

How much house can I afford with a $100,000 salary?

On a $100,000 gross annual salary, most buyers can comfortably afford a home priced between $300,000 and $400,000. The 28% housing ratio allows roughly $2,333 per month in total housing costs. At a 7% interest rate with 10% down, that supports a purchase price in the $330,000 to $360,000 range depending on local property taxes and insurance costs.

How much house can I afford with a $60,000 salary?

On a $60,000 gross annual salary, most buyers can comfortably afford a home priced between $180,000 and $240,000. The 28% rule limits monthly housing costs to roughly $1,400. At a 7% rate with 3.5% FHA down payment, that supports a purchase price of approximately $200,000 to $220,000. First-time buyer programs and down payment assistance are especially impactful at this income level.

Does a lender's pre-approval amount tell you what you can afford?

No. A pre-approval reflects the maximum loan a lender will issue based on your debt-to-income ratio, but it does not account for groceries, childcare, retirement savings, or lifestyle costs. Treat the pre-approval number as a ceiling and build your own monthly budget to set a realistic target.

How does a credit score affect home affordability?

Your credit score directly determines your mortgage interest rate. The difference between a 760 score and a 640 score is typically 0.5 to 1.0 percentage points on your rate, which can add $150 to $300 to your monthly payment and tens of thousands of dollars over the life of the loan.

Should HOA fees, taxes, and insurance be included in your home budget?

Yes. The number that matters is the total monthly cost of ownership, known as PITI plus HOA. Property taxes vary widely by county, homeowners insurance has risen sharply in many markets, and HOA fees can add $200 to $700 or more per month.

Is it smarter to buy less house than you qualify for?

Yes, in most cases. Buying below your maximum approval leaves room for maintenance surprises, life changes, and continued retirement saving. Many financial planners recommend keeping 10 to 20% of your monthly capacity in reserve.

How much do I need for a down payment?

The minimum down payment depends on your loan type. FHA loans require 3.5% down, conventional loans allow as little as 3%, and VA and USDA loans require no down payment for eligible borrowers. Putting down less than 20% on a conventional loan means paying private mortgage insurance (PMI). Down payment assistance programs are available in every state and can reduce or eliminate the required amount.

Guide

How Much House Can a First-Time Buyer Afford?

Last updated: June 17, 2026

The home price you can afford depends on more than your salary. Lenders weigh debt ratios, down payment, credit score, and the local cost of taxes and insurance. Below is the same framework experienced buyers use to find a number they can actually live with.

Start with your monthly budget, not the home price

Decide how much you can comfortably spend each month on housing before you talk to a lender. Add up your take-home pay, subtract real monthly expenses including retirement savings and groceries, and see what is left. A comfortable mortgage payment is one that still lets you save, handle a surprise car repair, and enjoy life.

Understand the 28/36 rule

The 28/36 rule says housing costs should stay below 28% of gross monthly income and total debt payments should stay below 36%. Housing costs - principal, interest, property taxes, homeowners insurance, and any HOA dues - are collectively called PITI. Many lenders will approve total debt ratios up to 43% or even 50%, but approval and affordability are not the same thing.

Know what really goes into the monthly payment

The listing price tells only part of the story. Every month a homeowner owes:

Principal and interest on the loan.
Property taxes, which vary dramatically by state and county.
Homeowners insurance, which has risen sharply in many markets.
Private mortgage insurance (PMI) if the down payment is less than 20% on a conventional loan.
HOA or condo fees, which can range from $0 to more than $1,000 per month.

Compare homes on the all-in PITI number, not just principal and interest.

Down payment, closing costs, and reserves

A 20% down payment is not required. FHA loans allow 3.5% down. Many conventional loans for first-time buyers allow 3% down. VA and USDA loans require no down payment for eligible buyers. Closing costs typically run 2% to 5% of the loan amount, and most lenders want to see two months of mortgage payments in reserves after closing.

How interest rates change what you can afford

Small rate changes have big consequences. On a $350,000 loan, dropping from 7.0% to 6.0% lowers the monthly principal and interest payment by about $225 - roughly $80,000 over the life of a 30-year loan. Shopping at least three lenders and improving your credit score before applying often pays off more than chasing a slightly cheaper home.

Leave room for the cost of owning, not just buying

Set aside 1% to 3% of the home's value each year for maintenance, repairs, and larger projects like a roof or HVAC system. Buying a home that consumes every dollar of monthly capacity leaves no margin for these realities.

Frequently asked questions

The 28/36 rule is an affordability guideline that says you should spend no more than 28% of your gross monthly income on total housing costs (PITI) and no more than 36% on all monthly debt payments combined. It is a conservative benchmark used by lenders and financial planners to keep buyers from becoming house-poor.

Key takeaways

The 28/36 rule caps housing costs at 28% of gross monthly income and total debt at 36%.
Total monthly housing cost includes principal, interest, property taxes, insurance, PMI, and any HOA fees - not just principal and interest.
FHA loans allow 3.5% down, conventional first-time buyer loans allow 3% down, and VA and USDA loans allow 0% down for eligible buyers.
Closing costs typically run 2% to 5% of the loan amount, and lenders usually require two months of mortgage payments in reserves.
Plan to set aside 1% to 3% of the home's value each year for maintenance and repairs after closing.
On a $100,000 salary, most first-time buyers can afford a home priced between $300,000 and $400,000 using the 28% housing cost rule.