How much house can I afford on a $75,000 salary?

On a $75,000 annual salary, using the 28% rule, your maximum monthly housing payment is $1,750. At 6.5% interest for 30 years with a 20% down payment, you can afford a home priced at approximately $340,000-$360,000, depending on property taxes and insurance in your area.

What is the 28/36 rule for mortgages?

The 28/36 rule states that you should spend no more than 28% of your gross monthly income on housing costs (mortgage, taxes, insurance) and no more than 36% on total debt (housing plus car payments, student loans, credit cards). This is the standard guideline used by most lenders to determine loan eligibility.

How much should I put down on a house?

The traditional recommendation is 20% down to avoid Private Mortgage Insurance (PMI). On a $300,000 home, that's $60,000. However, many programs allow 3-5% down (FHA loans require 3.5%). A smaller down payment means a larger loan, higher monthly payments, and PMI costs of $100-300/month until you reach 20% equity.

🏠 Home Buying Guide

How Much House Can I Afford? The Complete 2026 Guide

Updated April 2026 · 7 min read

As a general rule, you can afford a home priced at 3-4.5 times your annual gross income. On a $75,000 salary with a 20% down payment and 6.5% interest rate, you can afford approximately $340,000-$360,000. The key guideline: your monthly housing payment should not exceed 28% of your gross monthly income.

The 28/36 Rule: Your Starting Point

The most widely used affordability guideline is the 28/36 rule, which lenders use to determine loan eligibility. The "28" means your monthly housing costs (mortgage payment, property taxes, homeowner's insurance, and HOA fees) should not exceed 28% of your gross monthly income. The "36" means your total monthly debt payments (housing plus car loans, student loans, credit cards, and other debts) should not exceed 36% of gross income.

Home Affordability by Income (2026, at 6.5%)

Annual Income	Max Monthly Payment (28%)	Max Home Price (20% down)
$50,000	$1,167	$230,000
$75,000	$1,750	$350,000
$100,000	$2,333	$465,000
$125,000	$2,917	$580,000
$150,000	$3,500	$700,000

Down Payment: 20% vs. Less

The traditional recommendation is 20% down to avoid Private Mortgage Insurance (PMI). On a $300,000 home, that's $60,000 upfront. However, many buyers cannot save this amount, and several programs allow smaller down payments: FHA loans require 3.5%, conventional loans accept 3-5%, and VA loans offer 0% for veterans.

The trade-off is clear: a smaller down payment means a larger loan, higher monthly payments, and PMI costs of $100-300/month until you reach 20% equity. On a $300,000 home with 5% down ($15,000), your loan is $285,000 vs. $240,000 with 20% down — a difference of $284/month in payments and $45,000 more in total interest over 30 years.

Hidden Costs Most Buyers Forget

Your mortgage payment is just the beginning. Budget for: Property taxes (0.5-2.5% of home value annually, varies by state), homeowner's insurance ($1,000-3,000/year), maintenance and repairs (budget 1-2% of home value per year), closing costs (2-5% of loan amount, paid upfront), and utilities (typically higher than renting). A $300,000 home can cost $4,000-8,000 per year beyond the mortgage payment.

15-Year vs. 30-Year: Which Is Better?

A 30-year mortgage has lower monthly payments, giving you breathing room. A 15-year mortgage saves enormous amounts on interest. For a $300,000 loan at 6.5%: the 30-year option costs $1,896/month and $382,633 in total interest. The 15-year costs $2,613/month but only $170,389 in total interest — saving you $212,244. If you can comfortably afford the 15-year payment, it's almost always the better financial choice.

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The 28/36 Rule: How Lenders Decide What You Can Afford

Most lenders use the 28/36 rule: your monthly housing costs should not exceed 28% of gross income, and total debt payments should not exceed 36%.

For a household earning $8,000/month gross: maximum housing payment = $2,240 (28%). If you have $400/month in car payments and $300 in student loans, your total debt is $2,940 (36.75%) — slightly over the 36% threshold, which could affect approval or rate. FHA loans are more lenient: up to 31% front-end and 43% back-end. VA loans have no front-end ratio requirement but use 41% back-end. However, just because you can qualify for a certain amount doesn't mean you should borrow it. Financial advisors often recommend keeping housing costs at 25% of take-home pay (not gross) for comfortable living with room for savings and emergencies.

Hidden Costs of Homeownership Beyond the Mortgage

Your mortgage payment is typically only 60-70% of the total monthly cost of owning a home. Property taxes, insurance, maintenance, HOA fees, and utilities add 30-40% more.

Property taxes: Average 1.1% of home value nationally ($3,850/year on a $350,000 home), but ranges from 0.28% in Hawaii to 2.47% in New Jersey. Homeowner's insurance: $1,200-3,000/year depending on location and coverage. PMI: 0.5-1% of loan amount per year if you put less than 20% down — that's $1,750-3,500/year on a $350,000 home. Maintenance: Budget 1-2% of home value per year ($3,500-7,000). Older homes need more. HOA fees: $200-500/month in condos and planned communities. Utilities: $200-400/month average. A $350,000 home with a $1,896/month mortgage payment actually costs $2,800-3,200/month when you include everything. Use our Mortgage Calculator to estimate your monthly payment, then add 40% for true cost.

The 28/36 Rule: How Lenders Decide Your Budget

Most mortgage lenders use the 28/36 rule: your monthly housing costs should not exceed 28% of gross income, and total debt payments should not exceed 36%.

For a $6,000/month gross income ($72,000/year): maximum housing payment = $1,680/month (28%), maximum total debt = $2,160/month (36%). If you have a $400/month car payment and $200/month student loans, your remaining housing budget is $2,160 - $600 = $1,560/month. At 6.5% interest for 30 years, that payment supports a mortgage of approximately $247,000. Add a 20% down payment ($62,000) and your maximum home price is roughly $309,000. However, just because a lender approves you for this amount doesn't mean you should spend it. Financial advisors often recommend the more conservative approach of spending no more than 3x your annual gross income on a home (in this example, $216,000). This leaves room for savings, emergencies, and lifestyle expenses that the 28/36 rule ignores. Use our Mortgage Calculator to see exactly what different home prices cost monthly.

Hidden Costs of Homeownership Beyond the Mortgage

The monthly mortgage payment is typically only 60-70% of the true cost of owning a home. Property taxes, insurance, maintenance, and utilities add significantly to the real monthly expense.

Property taxes: Average 1.1% of home value annually ($275/month on a $300,000 home), but range from 0.3% (Hawaii) to 2.2% (New Jersey).
Homeowners insurance: $150-300/month depending on location and coverage.
PMI (Private Mortgage Insurance): Required if down payment is less than 20%. Typically 0.5-1% of loan amount per year ($125-250/month on a $300,000 loan).
Maintenance: Budget 1-2% of home value per year ($250-500/month). This covers HVAC, plumbing, roof, appliances, and landscaping. Older homes (20+ years) trend toward 2%+.
HOA fees: If applicable, $200-500/month for condos, $50-200/month for planned communities.
Utilities: Typically higher than renting due to larger space. Average: $200-400/month.

Total real cost of a $300,000 home with 20% down at 6.5%: Mortgage $1,517 + Taxes $275 + Insurance $175 + Maintenance $375 + Utilities $300 = approximately $2,642/month — 74% more than the mortgage alone.