How much house can I afford on $40,000?
Based on the 28/36 debt-to-income guideline.
$123,053
home price on a $40,000 salary at 6.5%, 10% down, 28% front-end ratio, no other debt
Affordable price by mortgage rate
| Rate | Home price | 10% down | Max housing cost/mo |
|---|---|---|---|
| 6% | $129,727 | $12,973 | $933 |
| 6.5% | $123,053 | $12,305 | $933 |
| 7% | $116,906 | $11,691 | $933 |
| 7.5% | $111,236 | $11,124 | $933 |
Assumes 25% of the housing budget goes to property tax, insurance and PMI. Car loans, student loans and card payments reduce this under the 36% back-end rule.
With other monthly debt (6.5%)
| Other debt/mo | Home price |
|---|---|
| $0 | $123,053 |
| $300 | $118,658 |
| $600 | $79,105 |
| $1,000 | $26,368 |
FAQ
How much house can I afford on $40,000 a year?
Roughly $123,053 at a 6.5% rate with 10% down and no other debt, keeping housing at 28% of gross income ($933/month).
What is the 28/36 rule?
Lenders traditionally want housing costs under 28% of gross monthly income and all debt payments under 36%.