Can I afford a $500k house on $100k income?

With $100k annual income ($8,333/month gross), the conventional 28/36 rule suggests a maximum housing payment of about $2,333/month (28% front-end). At current rates (6-7%), that supports a loan of roughly $350,000–$380,000. Adding a down payment of $120,000–$150,000 would be needed to reach a $500k purchase price. Use our house affordability calculator to test your exact down payment, debt, and rate scenario.

What is the 28/36 rule in home buying?

The 28/36 rule is the conventional lending standard: your front-end DTI (housing payment ÷ gross monthly income) should not exceed 28%, and your back-end DTI (total monthly debt ÷ gross monthly income) should not exceed 36%. If your existing monthly debt is $500, the back-end ratio becomes the binding constraint because it leaves less room for the new mortgage payment.

How does monthly debt affect home buying power?

Monthly debt payments (car loans, student loans, credit cards) directly reduce the housing payment you can afford under the back-end DTI. For example, with $800/month in existing debt at the 36% back-end limit on a $6,000/month income, only $1,360/month remains for housing (36% of $6,000 = $2,160 total debt capacity minus $800 existing debt). Reducing or paying off debt before applying for a mortgage can significantly increase your home buying power.

What is the difference between FHA 31/43 and Conventional 28/36?

FHA loans allow higher DTI ratios: 31% front-end and 43% back-end versus conventional 28/36. This makes FHA accessible for buyers with higher debt loads or smaller down payments (as low as 3.5%). However, FHA requires mortgage insurance premiums (MIP) for the life of the loan or at least 11 years, which adds to the monthly cost. Conventional loans typically require 20% down to avoid PMI but offer more flexibility in other areas.

How much income is needed for a $400k home?

For a $400,000 home with 20% down ($80,000), the loan amount is $320,000. At 6.75% over 30 years, the principal and interest is about $2,075/month. Adding property taxes ($400/month) and insurance ($125/month) gives a total PITI of roughly $2,600. Under the 28% front-end rule, you need gross monthly income of at least $9,286 ($111,429 annually). Under the 36% back-end rule with no other debt, the same $2,600 payment requires $7,222/month ($86,666 annually). The higher of the two is the safe benchmark.

Do HOA fees count toward DTI?

Yes. HOA fees, along with property taxes, homeowners insurance, and the principal and interest payment, are all included in the front-end DTI calculation. Lenders review the total monthly housing obligation — often called PITI (Principal, Interest, Taxes, Insurance) plus HOA — to ensure it stays within the front-end ratio limit.

Can I get a mortgage with a 50% DTI?

Conventional loans almost never exceed 36% back-end DTI, and most automated underwriting systems cap out around 43-45%. FHA allows up to 43% in most cases, and VA allows up to 41% (with compensating factors). Some portfolio or non-QM lenders may go higher, but they charge significantly higher rates and require larger down payments. If your DTI is above 43%, focus on paying down debt before applying for a mortgage.

House Affordability Calculator

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