Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $300,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $1,200/mo debts | $2,400/mo debts |
|---|---|---|---|
| 5.5% | $1,070,017 | $1,070,017 | $1,007,534 |
| 6.5% | $981,336 | $981,336 | $924,032 |
| 7.5% | $903,146 | $903,146 | $850,408 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 3.3 times income. Add $1,200 of monthly debts and the housing ratio still binds and the price becomes $981,336. A one-point change in rate moves the price by roughly $83,435 at this income.
Home price by down payment (6.5%, $1,200/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $32,319 | $923,404 | $371 |
| 5% | $46,808 | $936,157 | $371 |
| 10% | $98,134 | $981,336 | $368 |
| 20% | $229,357 | $1,146,787 | $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 $981,336 figure is built
Start from gross monthly income of $25,000. The 28% housing limit is $7,000; the 36% total-debt limit is $9,000, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $981,336 with $98,134 down, the loan is $883,203. Principal and interest at 6.5% over 30 years come to $5,582 a month, property tax $900, insurance $150 and PMI $368, for a total of $7,000, right at the limit.
A 15-year loan at the same rate supports about $750,140, 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
- $250k a year: about $814,199 with the same assumptions.
- $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.