Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $50,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $200/mo debts | $400/mo debts |
|---|---|---|---|
| 5.5% | $158,810 | $158,810 | $148,397 |
| 6.5% | $145,648 | $145,648 | $136,098 |
| 7.5% | $134,044 | $134,044 | $125,254 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 2.9 times income. Add $200 of monthly debts and the housing ratio still binds and the price becomes $145,648. A one-point change in rate moves the price by roughly $12,383 at this income.
Home price by down payment (6.5%, $200/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $4,797 | $137,050 | $55 |
| 5% | $6,947 | $138,943 | $55 |
| 10% | $14,565 | $145,648 | $55 |
| 20% | $34,041 | $170,204 | $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 $145,648 figure is built
Start from gross monthly income of $4,167. The 28% housing limit is $1,167; the 36% total-debt limit is $1,500, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $145,648 with $14,565 down, the loan is $131,084. Principal and interest at 6.5% over 30 years come to $829 a month, property tax $134, insurance $150 and PMI $55, for a total of $1,167, right at the limit.
A 15-year loan at the same rate supports about $111,335, 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
- $40k a year: about $112,221 with the same assumptions.
- $50k a year: about $145,648.
- $60k a year: about $179,076.
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.