How much house can I afford on $75,000 a year?

#The short answer: three budgets for a $75,000 income

A $75,000 salary is $6,250 a month before tax. Lenders and housing agencies express affordability as a share of that gross figure, and the share you choose changes the answer more than anything else. The table uses a 30-year fixed loan at today’s 7.24% average, 10% down, property tax at the national ratio of 0.89%, insurance at $4.90 per $1,000 and PMI at the midpoint of Freddie Mac’s range.

The first row is the one to plan around. The last two are lender ceilings, and because they cover all debts, they only apply to housing if you owe nothing else. Approval at those levels is possible, but housing would then take up to half of your gross pay before taxes, savings and everyday costs.

$242,000

#How lenders turn $75,000 into a monthly budget

Two ratios do the work. The housing ratio divides the whole housing payment — principal, interest, taxes, insurance, mortgage insurance and HOA dues — by gross monthly income. The debt-to-income ratio (DTI) adds every other monthly obligation that shows on a credit report: auto loans, student loans, minimum card payments, child support.

Freddie Mac’s consumer guidance says housing should ideally stay under 30% and total debt under 45%. Fannie Mae’s Selling Guide sets the hard limits for most conventional loans: 36% for manually underwritten files, up to 45% with strong credit and reserves, and 50% for loans approved by its Desktop Underwriter system.

#What the monthly payment includes

At the comfortable budget, here is where the $1,875 goes on a $242,000 home with 10% down:

PMI ends automatically once the balance is scheduled to reach 78% of the original value, so this payment falls later in the loan. Taxes and insurance, on the other hand, tend to rise over time and are often collected through escrow.

#How other debts shrink the price

Every dollar of monthly debt comes straight out of the DTI budget. A $300 car payment, for example, removes $300 a month that could otherwise have gone to housing — and at today’s rate that is a meaningful slice of purchase price.

#Down payment changes the answer

The same monthly budget buys more house with a bigger down payment, because less of it goes to principal, interest and PMI. Cash needed at closing rises much faster, though: you also need closing costs, which the CFPB puts at 2% to 5% of the price.

Conventional loans can start at 3% down and FHA loans at 3.5%; VA and USDA loans allow 0% down for eligible buyers. Many state agencies add down-payment assistance on top — Texas programs offer 2%–5% of the loan, for example.

#How much the interest rate matters

Rates move every week. Freddie Mac’s survey is the benchmark, and your own quote depends on credit, down payment, loan type and points. Here is what the comfortable budget buys at different rates:

A rate one percentage point lower adds about $21,000 of buying power on the same budget, which is why it pays to improve your credit score, compare several Loan Estimates and consider whether buying points makes sense for how long you’ll keep the loan.

#Where $75,000 goes furthest

Property taxes vary widely by state, so the same budget supports different prices. The table keeps everything else equal and swaps in each state’s ratio of median property taxes to median home value from the Census Bureau, then compares the result with the state’s median home value.

Insurance is held at the national average here; in states with high premiums, such as Texas, the real budget is tighter. The Texas guide shows the state’s own insurance and tax figures.

#Estimate your own number

1. 1

   Start from gross monthly income

   Divide your annual pay by 12; include only income a lender can document.

2. 2

   Pick a housing budget

   Multiply by 0.30 for a comfortable target (Freddie Mac’s guideline), then subtract nothing else yet.

3. 3

   Check your debt-to-income ratio

   Add your other monthly debts to that housing budget and divide by gross monthly income; keep it at or below 45% if you can.

4. 4

   Price in taxes, insurance and PMI

   Use your state’s property tax ratio and a real insurance quote; PMI applies below 20% down on a conventional loan.

5. 5

   Convert the budget to a price

   Use the mortgage payment calculator and adjust the price until the total matches your budget.

6. 6

   Get pre-approved

   A lender’s verified figure replaces your estimate and tells sellers you can close.

CalculatorMortgage payment calculatorPrincipal, interest, taxes, insurance and PMI in one monthly number.Open calculator

#The bottom line

On $75,000 a year, plan around a home near $242,000 with 10% down at today’s rates, and treat anything above $364,000 as a stretch that only works with no other debts. Lower taxes, a bigger down payment or a lower rate push the number up; car payments, high insurance and HOA dues pull it down. For other incomes, see the buying hub, which runs the same maths at $50,000, $100,000 and $150,000.