How Much House Can I Afford?

As a rough guide, most buyers can afford a home priced at 3 to 4 times their gross yearly income, with total housing costs kept under about 28% of gross monthly income. On an $80,000 salary, that points to a home of roughly $240,000 to $320,000 — but your debts, deposit, credit score and interest rate can move that number a long way in either direction, so always check the monthly payment before you fall in love with a house.

By Calcly Team · Last updated 6 November 2026 · Free guide · Not financial advice

Start with your income

Affordability starts with gross income — what you earn before tax — because lenders judge you on that number. Take your yearly salary and divide by 12 to get your monthly gross income. On $80,000 a year, that is $80,000 ÷ 12 = $6,666.67 a month. The quick price guide is 3 to 4 times yearly income: $80,000 × 3 = $240,000 at the cautious end and $80,000 × 4 = $320,000 at the stretch end. This is only a starting point, because two households on the same salary can afford very different homes — one may have no debts and a large deposit, while the other carries car loans, student loans and credit card debt. If your income varies, use a conservative average of the last year or two rather than your best month, and count only income you can prove: salary, regular overtime, and steady self-employment income all count, while one-off bonuses usually do not.

The 28/36 rule lenders use

Most lenders apply two limits, known as the 28/36 rule. First, your housing costs — mortgage payment, property taxes, home insurance and PMI together — should stay under 28% of your gross monthly income. On $6,666.67 a month, that limit is $6,666.67 × 28 ÷ 100 = $1,866.67 a month. Second, all of your debts together, including the housing payment, should stay under 36% of gross monthly income, which is $6,666.67 × 36 ÷ 100 = $2,400 a month. So if you already pay $400 a month on a car loan and $150 on a student loan, your debts before housing are $550, leaving $2,400 − $550 = $1,850 a month for housing under the second rule — slightly tighter than the 28% limit. The lower of the two limits is the one that binds, which is why paying down debts before you apply can raise the home you can afford more than a pay rise of the same size. Your lender will also look at your credit score, your work history and how much deposit you have, but the 28/36 rule is the quickest honest check you can do yourself.

Your deposit changes everything

The deposit is the part of the price you pay yourself, and it changes the maths in three ways. First, a bigger deposit means a smaller loan, so a smaller monthly payment and a smaller interest bill. Second, a deposit of 20% or more usually avoids PMI — private mortgage insurance — which is an extra monthly charge lenders add when your deposit is small, to protect themselves. Third, a bigger deposit makes your application stronger, which can mean a better interest rate. On a $300,000 home, a 20% deposit is $60,000 and leaves a $240,000 loan, while a 10% deposit is $30,000 and leaves a $270,000 loan. That $30,000 difference in deposit adds roughly $190 a month to the payment at 6.5% over 30 years, plus PMI on top. Saving a bigger deposit is slow and unglamorous, but it is the single most powerful lever most buyers have — more powerful than haggling over the interest rate by a fraction of a percent.

Worked example: $80,000 salary

Let us put it together. You earn $80,000 a year, so $6,666.67 a month. The 28% housing limit is $1,866.67 and the 36% total-debt limit is $2,400. You have no other debts and a $60,000 deposit. At 3 times income you can look at a $240,000 home, and with your deposit the loan is $180,000 — comfortably affordable. At 4 times income you can look at a $320,000 home, and with a 20% deposit of $64,000 the loan is $256,000. Now check the payment: a $240,000 loan at 6.5% over 30 years costs $1,516.96 a month for principal and interest, which fits inside the $1,866.67 limit with room for taxes and insurance. But a $320,000 loan at 6.5% over 25 years costs $2,160.66 a month for principal and interest alone — already above the $1,866.67 limit, before taxes and insurance. That tells you the honest answer: on this salary, the $320,000 home is a stretch unless you bring a bigger deposit, find a lower rate, or accept a longer loan term. Use our mortgage calculator to test your own numbers the same way — change the price, deposit, rate and term and watch the monthly payment move.

Costs beyond the mortgage payment

The loan payment is only part of owning a home. Property taxes are usually charged yearly as a percentage of the home value and are often collected monthly with the mortgage — in many places they add $200 to $500 a month. Home insurance is required by most lenders and adds more. If your deposit is under 20%, PMI can add $100 to $300 a month until you build enough equity to remove it. Then there is maintenance: a common budget is about 1% of the home value per year, so $3,000 a year on a $300,000 home, or $250 a month set aside for repairs, a new roof, a broken boiler and all the small things that go wrong. Utilities, and homeowners association fees if the property has them, come on top. Add all of these to the loan payment before you compare it with the 28% limit — buyers who forget them are the ones who find the house unaffordable six months after moving in.

How to afford more (safely)

If the home you want is just out of reach, there are honest ways to close the gap. Paying off a car loan or credit card can lift your 36% limit directly. Improving your credit score — by paying on time and keeping card balances low — can cut your interest rate, and a 1% lower rate on a $250,000 loan saves roughly $160 a month over 30 years. A longer loan term lowers the monthly payment but raises the total interest, so treat it as a last resort rather than a free lunch. And remember that the first home does not have to be the forever home: buying something smaller now, building equity for a few years, and moving up later is how most homeowners actually get there. The goal is a payment you can live with even if life gets harder — a job loss, a pay cut or an unexpected bill — not the maximum the bank will lend you.

Check your own numbers with our mortgage calculator and our loan calculator, and see how regular saving grows with our compound interest calculator while you build your deposit.

This guide is general information only, not financial advice. Lending rules, rates and taxes differ by country and lender — speak to a qualified adviser before you borrow.