Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $200,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $800/mo debts | $1,600/mo debts |
|---|---|---|---|
| 5.5% | $705,534 | $705,534 | $663,879 |
| 6.5% | $647,061 | $647,061 | $608,858 |
| 7.5% | $595,505 | $595,505 | $560,346 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 3.2 times income. Add $800 of monthly debts and the housing ratio still binds and the price becomes $647,061. A one-point change in rate moves the price by roughly $55,015 at this income.
Home price by down payment (6.5%, $800/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $21,310 | $608,862 | $245 |
| 5% | $30,864 | $617,272 | $244 |
| 10% | $64,706 | $647,061 | $243 |
| 20% | $151,231 | $756,154 | $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 $647,061 figure is built
Start from gross monthly income of $16,667. The 28% housing limit is $4,667; the 36% total-debt limit is $6,000, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $647,061 with $64,706 down, the loan is $582,355. Principal and interest at 6.5% over 30 years come to $3,681 a month, property tax $593, insurance $150 and PMI $243, for a total of $4,667, right at the limit.
A 15-year loan at the same rate supports about $494,618, 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
- $150k a year: about $479,924 with the same assumptions.
- $200k a year: about $647,061.
- $250k a year: about $814,199.
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.