Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $250,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $1,000/mo debts | $2,000/mo debts |
|---|---|---|---|
| 5.5% | $887,776 | $887,776 | $835,707 |
| 6.5% | $814,199 | $814,199 | $766,445 |
| 7.5% | $749,326 | $749,326 | $705,377 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 3.3 times income. Add $1,000 of monthly debts and the housing ratio still binds and the price becomes $814,199. A one-point change in rate moves the price by roughly $69,225 at this income.
Home price by down payment (6.5%, $1,000/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $26,815 | $766,133 | $308 |
| 5% | $38,836 | $776,714 | $307 |
| 10% | $81,420 | $814,199 | $305 |
| 20% | $190,294 | $951,470 | $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 $814,199 figure is built
Start from gross monthly income of $20,833. The 28% housing limit is $5,833; the 36% total-debt limit is $7,500, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $814,199 with $81,420 down, the loan is $732,779. Principal and interest at 6.5% over 30 years come to $4,632 a month, property tax $746, insurance $150 and PMI $305, for a total of $5,833, right at the limit.
A 15-year loan at the same rate supports about $622,379, 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
- $200k a year: about $647,061 with the same assumptions.
- $250k a year: about $814,199.
- $300k a year: about $981,336.
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.