Quick answer
A comfortable budget keeps the full housing payment under 30% of gross income and all debts under 45%, as Freddie Mac suggests. On $100,000 a year with $500 of other monthly debts, 10% down and the 7.24% average rate, that points to a home of about $323,000; lenders’ limits could stretch it to $474,000.
Key facts
7.24%
Default rate (30-year average)
Freddie Mac Primary Mortgage Market Survey · Week of Oct 29, 2026
$81,604/yr
US median household income
US Census Bureau, American Community Survey 2024 1-year · 2024 ACS 1-year
How the calculator works
Lenders size your loan from gross monthly income — pay before taxes — and two ratios. The housing ratio compares the full monthly housing payment with income; the debt-to-income ratio (DTI) adds every other monthly debt payment that shows on your credit report or application: car loans, student loans, minimum card payments, child support.
The calculator works backwards from those ratios. For each limit it finds the monthly housing budget, then the highest price whose full payment fits inside it:
Monthly income
Annual income ÷ 12.
Housing budget
The ratio limit × monthly income, minus your other debts when the limit is a total-debt (DTI) cap. The comfortable scenario uses whichever of its two limits is lower.
Full payment per dollar of price
Principal and interest on the loan, plus property tax, homeowners insurance and PMI (when you put less than 20% down), each expressed per dollar of home price.
Price
Budget ÷ payment per dollar, after subtracting any HOA dues.
The four scenarios
| Scenario | Limit | Where it comes from |
|---|---|---|
| Comfortable | Housing ≤ 30%, all debts ≤ 45% | Freddie Mac’s consumer guidance |
| Lender, standard | All debts ≤ 36% | Fannie Mae’s manual-underwriting limit |
| Lender, strong file | All debts ≤ 45% | Fannie Mae’s manual limit with strong credit and reserves |
| Lender maximum | All debts ≤ 50% | Fannie Mae’s automated Desktop Underwriter limit |
The lender maximum is what a lender may approve, not a target. The higher your DTI, the less room you have for savings, repairs and the costs a lender doesn’t count, such as childcare and commuting. FHA loans use their own benchmarks — 31% for housing and 43% for total debt when a loan is underwritten manually without compensating factors.
Worked example: $100,000 income
$100,000 a year, $500 a month of other debts, 10% down, 30-year fixed at 7.24%
| Scenario | Monthly housing budget | Home price |
|---|---|---|
| Comfortable | $2,500 | $323,000 |
| Lender, standard | $2,500 | $323,000 |
| Lender, strong file | $3,250 | $420,000 |
| Lender maximum | $3,667 | $474,000 |
Taxes at the national ratio of 0.89% a year, insurance at $4.90 per $1,000 of value and PMI at the midpoint of Freddie Mac’s range.
Debts matter more than most buyers expect. Without the $500 of other payments, the comfortable price rises to $323,000. Rate matters too: one percentage point lower, at the same debts, supports $350,000.
What the result does not include
- Cash to close. You also need the down payment plus closing costs — typically 2% to 5% of the price, according to the CFPB — and a cushion afterwards. The closing cost estimator breaks those down by state.
- Your real tax bill and insurance quote. Pick your state for its average tax ratio, then replace the defaults with the listing’s tax history and an insurance quote.
- Lender overlays. Lenders can set stricter limits than Fannie Mae, Freddie Mac or FHA, especially with lower credit scores.
Ways to afford more without stretching
Paying off a small debt before you apply raises every scenario, because DTI counts the payment, not the balance. A larger down payment cuts the loan and can remove PMI at 20%. Comparing Loan Estimates from several lenders on the same day can lower your rate. Down-payment assistance from your state’s housing finance agency can cover part of the cash you need — see the first-time buyer guides.
Frequently asked questions
How much house can I afford on my salary?
Divide your annual pay by 12, take 30% of that as a comfortable housing payment (minus nothing else) and keep all debts under 45%. The calculator converts that budget into a price at today’s rate, with taxes, insurance and PMI included.
What debt-to-income ratio do lenders allow?
Fannie Mae accepts up to 50% through its automated underwriting system and 36% on manually underwritten loans, rising to 45% with strong credit and reserves. FHA’s manual benchmarks are 31% for housing and 43% for total debt.
Does the calculator use gross or net income?
Gross income — pay before taxes and deductions — because that is what lenders use. Check the result against your take-home pay before you commit.
Which debts count in debt-to-income?
Monthly payments on loans and credit lines that appear on your credit report or application, such as car, student and personal loans, credit card minimums and court-ordered support. Rent you will stop paying, utilities and groceries do not count.
Why is my pre-approval different from the calculator?
Lenders verify income, use your actual credit score and price, and may apply their own limits. Property taxes and insurance for a specific home also differ from state averages.
How does a lower rate change what I can afford?
At the same budget, a lower rate shrinks the principal-and-interest part of each payment, so more of the budget can go to price. In the example above, one percentage point lower raises the comfortable price from $323,000 to $350,000.
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value (2023 data)
- Freddie Mac My Home — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- Freddie Mac My Home — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026)
- Fannie Mae Selling Guide B3-6-02 — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025)
- HUD Mortgagee Letter 2026-11 — FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors) (Oct 8, 2026)
- CFPB — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Median household income (2024 ACS 1-year)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.