Required Salary to Afford a Home
Calculate the annual salary you need to comfortably afford a home based on price, down payment, and interest rate.
Required Annual Salary
How this calculator works:
Most lenders use the 28/36 rule for mortgage qualification:
- 28% rule: Your monthly housing costs should not exceed 28% of your gross monthly income.
- 36% rule: Total debt payments should not exceed 36% of gross monthly income.
This calculator uses the 28% rule (housing only).
Steps:
- Calculate the loan amount: Home Price - Down Payment
- Calculate the monthly mortgage payment using the standard amortization formula
- Add estimated monthly property tax and insurance
- Divide the total monthly housing cost by 0.28 to find required gross monthly income
- Multiply by 12 for the annual salary
Mortgage payment formula:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P = principal, r = monthly rate, n = total payments.
Rule of thumb: You can generally afford a home priced at 3-5 times your annual salary, depending on your down payment and local costs.