The short answer for $40,000 a year
$40,000 a year is $3,333.33 a month before tax. Under the 28/36 guideline, your full house payment (principal, interest, property tax, insurance and any PMI) stays under 28% of that, which is $933.33 a month, and all your debt payments together stay under 36%, $1,200.00.
With no other debts and 10% down at 6.5%, $933.33 a month buys about $115,107: $654.80 principal and interest, $85.37 property tax, $150.00 insurance and $43.17 PMI. That needs $11,511 down, plus closing costs.
Home price you can afford, no other debt
| Example rate | 5% down | 10% down | 20% down |
|---|---|---|---|
| 6% | $114,636 | $120,279 | $141,445 |
| 6.5% | $109,678 | $115,107 | $135,099 |
| 7% | $105,034 | $110,260 | $129,176 |
| 7.5% | $100,685 | $105,719 | $123,644 |
Putting 20% down instead of 5% raises the price from $109,678 to $135,099, partly because there's no PMI. A rate of 7.5% instead of 6.5% cuts the 10%-down price to $105,719.
With $500 a month of other debt
With $500 a month of other debt, the 36% total-debt limit becomes the tighter one: $1,200.00 minus $500 leaves $700.00 for housing, $233.33 less than the 28% limit. That lowers every price in the table.
| Example rate | 5% down | 10% down | 20% down |
|---|---|---|---|
| 6% | $80,489 | $84,451 | $99,313 |
| 6.5% | $77,008 | $80,820 | $94,857 |
| 7% | $73,748 | $77,417 | $90,698 |
| 7.5% | $70,694 | $74,228 | $86,814 |
How it's worked out
H is the lower of 28% of monthly income and 36% minus other debts, d the down payment share, k = i ÷ (1 − (1 + i)^−360) the monthly payment per dollar borrowed at monthly rate i, t the property tax rate ÷ 12, and PMI = (1 − d) × 0.5% ÷ 12 when you put down less than 20%.
Assumptions you can change in the calculator above: 30-year fixed loan, 0.89% property tax (the US median tax paid ÷ median home value, Census ACS 2024), $1,800 a year insurance, 0.5% a year PMI under 20% down, no HOA. Rates are examples, not today's rates.
Limits
- 28/36 is a cautious guide, not a lender's limit. Fannie Mae allows total debt up to 36% on manually underwritten loans, and up to 45% or 50% in some cases, so you may be approved for more than this.
- It uses gross income, so it doesn't see taxes, childcare or savings goals. A comfortable payment may be lower.
- Property tax and insurance vary widely. Try your state's rate from the mortgage calculator by state.
Other salaries: $50k · $60k · $70k · $80k · $90k · $100k · $120k · $150k · $200k. Know the loan size instead? See the income needed for a $200k mortgage.
Sources
- CFPB: What is a debt-to-income ratio?
- Fannie Mae Selling Guide B3-6-02: debt-to-income ratios (36% maximum for manually underwritten loans, up to 45% or 50% in some cases)
- CFPB: What is private mortgage insurance?
- US Census Bureau, American Community Survey 2024 1-year estimates, table B25077: median value of owner-occupied homes
- US Census Bureau, American Community Survey 2024 1-year estimates, table B25103: median real estate taxes paid
This is an estimate for planning. A lender's pre-approval uses your credit, the loan program and local costs. It isn't financial advice.