How Much House Can I Afford on a $70,000 Salary?
Use this step‑by‑step guide to calculate your budget, estimate mortgage payments, and plan for a comfortable monthly payment on a $70K income.
Understanding Your Budget
Your gross annual income of $70,000 translates to roughly $5,833 per month before taxes. Lenders typically use two ratios to determine affordability:
- Front‑end DTI: Housing costs (principal, interest, taxes, insurance) ≤ 28% of gross monthly income.
- Back‑end DTI: Total debt payments ≤ 36% of gross monthly income.
Key Affordability Metrics
Front‑End vs. Back‑End DTI
- Front‑end (Housing) DTI = (P + I + T + I) ÷ Gross Income
- Back‑end (Total) DTI = (All Debts) ÷ Gross Income
The 28/36 Rule
Most lenders want your housing costs under 28% and total debts under 36% of your gross income.
On $5,833 /mo, 28% → $1,633/mo max for mortgage P&I+T&I.
How to Calculate Your Price Range
- Max Monthly Housing Budget: 28% × $5,833 = $1,633
- Mortgage Estimate (30‑year, 4% APR):
- $1,633/mo → loan size ≈ $343,000
- Add 20% down payment → purchase price ≈ $343,000 ÷ 0.80 ≈ $429,000
| Item | Amount |
|---|---|
| Gross monthly income | $5,833 |
| Max housing payment (28%) | $1,633 |
| Estimated loan (4%/30 yr) | $343,000 |
| + 20% down | $86,000 |
| Max purchase price | $429,000 |
Note: If you can put down less than 20%, mortgage insurance will add to your monthly cost.
Factors That Impact Your Mortgage
Down Payment
- 20% down avoids PMI and secures best rates.
- With only 10% down, your payment rises and PMI applies.
Interest Rates
- A 0.5% rate fluctuation changes your buying power by tens of thousands.
- Lock rates when you’re ready to avoid surprises.
Taxes & Insurance
- Property taxes and homeowners insurance vary by area.
- Use online calculators (e.g., our Mortgage Calculator) to estimate T&I.
Tips to Stretch Your Budget
- Shop down payment assistance programs & first‑time buyer grants.
- Pay off high‑interest debt to improve back‑end DTI.
- Consider a 15‑year loan if you can afford a slightly higher payment.
- Lock in a rate when market dips—interest savings boost buying power.
Frequently Asked Questions
Q: Can I buy a $500K home on $70K salary?
A: A $500K purchase with 20% down requires a $400K mortgage. At today’s rates, that payment exceeds the 28% front‑end cap on a $70K salary.
Q: How much cash do I need upfront?
A: For a $429K purchase at 20% down, you’d need ≈ $86K plus ~$5K–10K in closing costs.
Q: What if my DTI is too high?
A: Lower existing debts, boost down payment, or look at less expensive markets.
Next Steps
