Home price by interest rate and monthly debts
Each cell is the highest price whose full monthly payment fits both ratios on $80,000 a year with 10% down. Monthly debts are payments on car loans, student loans and cards.
| Rate | No debts | $300/mo debts | $650/mo debts |
|---|---|---|---|
| 5.5% | $268,155 | $268,155 | $249,931 |
| 6.5% | $245,931 | $245,931 | $229,217 |
| 7.5% | $226,336 | $226,336 | $210,954 |
At 6.5% with no other debts the housing ratio is the binding limit and the price is about 3.1 times income. Add $300 of monthly debts and the housing ratio still binds and the price becomes $245,931. A one-point change in rate moves the price by roughly $20,910 at this income.
Home price by down payment (6.5%, $300/mo debts)
| Down payment | Cash down | Home price | PMI / month |
|---|---|---|---|
| 3.5% | $8,099 | $231,413 | $93 |
| 5% | $11,730 | $234,609 | $93 |
| 10% | $24,593 | $245,931 | $92 |
| 20% | $57,479 | $287,394 | $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 $245,931 figure is built
Start from gross monthly income of $6,667. The 28% housing limit is $1,867; the 36% total-debt limit is $2,400, less any other debts. With no debts, the housing limit is lower, so it sets the budget. At a price of $245,931 with $24,593 down, the loan is $221,338. Principal and interest at 6.5% over 30 years come to $1,399 a month, property tax $225, insurance $150 and PMI $92, for a total of $1,867, right at the limit.
A 15-year loan at the same rate supports about $187,991, 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
- $75k a year: about $229,217 with the same assumptions.
- $80k a year: about $245,931.
- $90k a year: about $279,358.
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.