Salary needed by rate and down payment
Each cell is the gross yearly income whose 28% housing limit covers the full payment on a $500,000 home with no other debts.
| Rate | 3.5% down | 5% down | 10% down | 20% down |
|---|---|---|---|---|
| 5.5% | $152,098 | $150,139 | $143,609 | $123,407 |
| 6.5% | $165,390 | $163,225 | $156,006 | $134,426 |
| 7.5% | $179,275 | $176,894 | $168,956 | $145,937 |
Moving from 10% to 20% down lowers the income needed from $156,006 to $134,426 at 6.5%: the loan shrinks by $50,000 and the $188 a month of PMI goes away. A one-point change in rate moves the income needed by roughly $12,673 at 10% down.
How other debts change it (6.5%, 10% down)
| Other monthly debts | Salary needed | Limit that binds |
|---|---|---|
| None | $156,006 | 28% housing |
| $300 | $156,006 | 28% housing |
| $600 | $156,006 | 28% housing |
| $1,000 | $156,006 | 28% housing |
Small debts change nothing at first, because the 28% housing limit is the tighter one. Once other payments pass about 8% of income, the 36% limit takes over and every extra dollar of monthly debt needs about $2.78 more of monthly income.
How the $156,006 figure is built
With $50,000 down the loan is $450,000. Principal and interest at 6.5% over 30 years are $2,844 a month, property tax $458, insurance $150 and PMI $188, for $3,640 in total. Dividing by 28% gives $13,000 of gross monthly income, or $156,006 a year. A 15-year loan at the same rate needs about $202,106, because the same price is repaid twice as fast; see 15-year vs 30-year mortgages.
Nearby prices
- Salary needed for a $400k house: about $126,090.
- $500k house: about $156,006.
- Salary needed for a $600k house: about $185,921.
Going the other way: how much house you can afford on $200k a year.
Before you rely on this number
Lenders apply their own program limits, and a payment you qualify for is not always one you are comfortable with: the ratios use gross pay and ignore childcare, retirement saving and repairs. Check a specific listing with the mortgage calculator, try your own figures in the salary needed calculator, and read the 28/36 rule guide.