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The 28% rule states that you should spend **28% or less of your monthly gross income** on your mortgage payment (e.g. principal, interest, taxes and insurance). To determine how much you can afford using this rule, multiply your monthly gross income by 28%.

A Critical Number For Homebuyers

One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, **your mortgage payment shouldn't be more than 28% of your monthly pre-tax income and 36% of your total debt**. This is also known as the debt-to-income (DTI) ratio.

High Balance Conforming Loans

With 20% down, homes valued from $685,314 to $1,027,969.00 fall into this loan category. The final sales price of a home would need to be **no greater than $905,750.00** to achieve that $4,000 a month mortgage.

What you can afford: With a $50k annual salary, you're earning $4,167 per month before tax. So, according to the 28/36 rule, you should spend **no more than $1,167 on your mortgage payment per month**, which is 28% of your monthly pre-tax income.

On a $200,000, 30-year mortgage with a 4% fixed interest rate, your **monthly payment would come out to $954.83** — not including taxes or insurance. But these can vary greatly depending on your insurance policy, loan type, down payment size, and more. Credible is here to help with your pre-approval.

Senator Elizabeth Warren popularized the so-called "50/20/30 budget rule" (sometimes labeled "50-30-20") in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to **divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings**.

The traditional 35%/45% model says that **you shouldn't spend more than 35% of your pretax income or 45% of your after-tax income on your mortgage payment**. Let's say your household income is $5,000 before taxes and $4,000 after you deduct taxes.

The Income Needed To Qualify for A $500k Mortgage

A good rule of thumb is that the maximum cost of your house should be no more than 2.5 to 3 times your total annual income. This means that if you wanted to purchase a $500K home or qualify for a $500K mortgage, your minimum salary should fall **between $165K and $200K**.

To afford a $400,000 house, for example, you need about $55,600 in cash if you put 10% down. With a 4.25% 30-year mortgage, your monthly income should be **at least $8178** and (if your income is $8178) your monthly payments on existing debt should not exceed $981.

To purchase a $300K house, you may need to make **between $50,000 and $74,500 a year**. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, the type of home loan, loan term, and mortgage rate.

Assuming the best-case scenario — you have no debt, a good credit score, $90,000 to put down and you're able to secure a low 3.12% interest rate — your monthly payment for a $450,000 home would be $1,903. That means your annual salary would need to be **$70,000 before taxes**.

According to Brown, you should spend **between 28% to 36% of your take-home income** on your housing payment. If you make $70,000 a year, your monthly take-home pay, including tax deductions, will be approximately $4,530.

What portion of your income should go to your mortgage? Many lenders and mortgage experts adhere to the 28% limit – meaning your **monthly mortgage repayments should not exceed 28% of your gross monthly income** or the amount you earn before taxes are deducted.

Some experts suggest that the total amount you pay towards your mortgage **should not exceed 28% of your gross (rather than net) income**. And you should make sure that you don't go over 36% of gross income for the total amount you spend on all borrowing, including mortgage.

The 50/30/20 rule is a popular budgeting method that splits your monthly income among three main categories. Here's how it breaks down: **Monthly after-tax income**. This figure is your income after taxes have been deducted.

The basic rule of thumb is to **divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt**. By regularly keeping your expenses balanced across these main spending areas, you can put your money to work more efficiently.

This means that **total household debt (not including house payments) shouldn't exceed 20% of your net household income**. (Your net income is how much you actually “bring home” after taxes in your paycheck.) Ideally, monthly payments shouldn't exceed 10% of the NET amount you bring home.

If you have a 20% down payment on a $100,000 household salary, you can probably comfortably afford a **$560,000 condo**. this number assumes you have very little debt and $112,000 in the bank.

To find out how much car you can afford with this 36% rule, simply multiply your family's income by 0.36. So if you earn $100,000, for example, you could afford to take out a car loan of **up to $36,000** — assuming you don't have any other debt.

While buyers may still need to pay down debt, save up cash and qualify for a mortgage, the bottom line is that **buying a home on a middle-class salary is still possible — in some places**. Below, check out 15 cities where you can become a homeowner while earning $40,000 a year or less.

You can afford a **$225,000 house**.

For homes in the $800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in **$119,371 before tax**, assuming a 30-year loan with a 3.25% interest rate.

For the couple making $80,000 per year, the Rule of 28 limits their monthly mortgage payments to $1,866. Ideally, **you have a down payment of at least 10%, and up to 20%, of your future home's purchase price**. Add that amount to your maximum mortgage amount, and you have a good idea of the most you can spend on a home.

You need to make **$129,511 a year** to afford a 350k mortgage. We base the income you need on a 350k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $10,793. The monthly payment on a 350k mortgage is $2,590.

How much do I need to make for a $250,000 house? A $250,000 home, with a 5% interest rate for 30 years and $12,500 (5%) down requires an **annual income of $65,310**.