Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $125,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $500/mo debts | $1,000/mo debts |
|---|---|---|---|
| 5.5% | $432,172 | $432,172 | $406,138 |
| 6.5% | $396,355 | $396,355 | $372,478 |
| 7.5% | $364,774 | $364,774 | $342,800 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 3.2 times income. Add $500 of monthly debts and the housing ratio still binds and the price becomes $396,355. A one-point change in rate moves the price by roughly $33,699 at this income.
Home price by down payment (6.5%, $500/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $13,053 | $372,956 | $150 |
| 5% | $18,905 | $378,107 | $150 |
| 10% | $39,635 | $396,355 | $149 |
| 20% | $92,636 | $463,179 | $0 |
Reaching 20% down removes private mortgage insurance, which is why the jump from 10% to 20% is larger than the extra cash alone would suggest: the PMI money goes back into the principal-and-interest budget.
How the $396,355 figure is built
Start from gross monthly income of $10,417. The 28% housing limit is $2,917; the 36% total-debt limit is $3,750, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $396,355 with $39,635 down, the loan is $356,719. Principal and interest at 6.5% over 30 years come to $2,255 a month, property tax $363, insurance $150 and PMI $149, for a total of $2,917, right at the limit.
A 15-year loan at the same rate supports about $302,976, because the same budget has to repay principal twice as fast; it builds equity much sooner and costs far less interest over the life of the loan. See 15-year vs 30-year mortgages.
Comparing nearby incomes
- $120k a year: about $379,641 with the same assumptions.
- $125k a year: about $396,355.
- $130k a year: about $413,069.
Before you shop at this price
The ratios describe what a lender may approve, not what feels comfortable. They use gross pay and ignore retirement saving, childcare and commuting. Many buyers aim below the 28% line to keep room for repairs, which often run around 1% of a home's value a year. Check the payment on a specific listing with the mortgage calculator, weigh buying against renting with the rent vs buy calculator, and read the 28/36 rule guide for how lenders apply the ratios.