What salary do I need to buy a $400,000 house?

To buy a $400,000 house, assuming a 20% down payment ($80,000) and a 7.0% interest rate on a 30-year mortgage, your monthly P&I would be about $2,130. Adding estimated property taxes ($400/month) and insurance ($100/month), your total PITI would be around $2,630. Using the 28% rule, your gross monthly income would need to be approximately $9,393 ($2,630 / 0.28), which translates to an annual salary of about $112,716. This calculation does not include other debts.

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

On a $60,000 annual salary, your gross monthly income is $5,000. Using the 28% rule, your maximum PITI is $1,400 per month. Assuming a 7.0% interest rate, $100/month for insurance, and 0.1% for property taxes, you could likely afford a home in the range of $200,000 to $220,000, depending on your other debts and the specific property tax rate in your area.

What is the 28/36 rule in home buying?

The 28/36 rule states that your total monthly housing costs (Principal, Interest, Taxes, Insurance, and HOA fees) should not exceed 28% of your gross monthly income. Additionally, your total monthly debt payments (including housing costs, credit cards, car loans, student loans, etc.) should not exceed 36% of your gross monthly income. Lenders use this rule to assess your borrowing capacity.

How does my credit score affect what I can afford?

Your credit score significantly impacts what you can afford by influencing your mortgage interest rate. A higher credit score (typically 740+) qualifies you for lower interest rates, which means a larger portion of your monthly payment goes towards principal, allowing you to borrow more money for the same monthly payment. Conversely, a lower credit score results in higher interest rates, reducing your overall purchasing power.

Is it better to buy a house at 3x or 5x my income?

While lenders might approve you for a mortgage up to 5x your income, financial advisors generally recommend sticking closer to the 3x rule for a more financially comfortable homeownership experience. Buying at 3x your income leaves more room in your budget for savings, investments, unexpected repairs, and discretionary spending, reducing the risk of becoming "house poor." The 5x rule often pushes buyers to their financial limits, leaving little buffer.

What does PITI stand for?

PITI is an acronym that stands for Principal, Interest, Taxes, and Insurance. These are the four main components that make up your total monthly mortgage payment. Principal is the amount that reduces your loan balance, interest is the cost of borrowing, taxes are property taxes, and insurance is homeowner's insurance.

How Much House Can I Afford? 2026 Guide | One Percent…