The 28/36 Affordability Rule
28% Rule (Front-End)
Monthly mortgage payment ≤ 28% of gross monthly income
$70K salary → max $1,633/month mortgage
36% Rule (Back-End)
All debt payments ≤ 36% of gross monthly income
$70K salary → max $2,100/month total debt
Monthly Payment by Home Price & Rate
| Home Price | Down (3.5%) | At 6.5% | At 7% | At 7.5% |
|---|---|---|---|---|
| $200,000 | $7,000 | $1,207 | $1,254 | $1,303 |
| $300,000 | $10,500 | $1,811 | $1,881 | $1,955 |
| $400,000 | $14,000 | $2,414 | $2,508 | $2,607 |
| $500,000 | $17,500 | $3,018 | $3,135 | $3,258 |
30-year fixed mortgage. Does not include taxes, insurance, or PMI.
Frequently Asked Questions
How much house can I afford as a first-time buyer?
Use the 28/36 rule: your monthly mortgage payment should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%. On a $70,000/year salary, that's roughly a $1,633/month mortgage payment.
What is the minimum down payment for first-time buyers?
FHA loans require 3.5% down (with 580+ credit score). Conventional loans allow 3% down for first-time buyers. VA and USDA loans offer 0% down for eligible buyers. A 20% down payment eliminates PMI.
What is PMI and how do I avoid it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It typically costs 0.5–1.5% of the loan amount annually. Avoid it by putting 20% down, or choose a lender-paid PMI option.
What credit score do I need to buy a house?
FHA loans: 580+ (3.5% down) or 500–579 (10% down). Conventional loans: 620+. The best rates go to borrowers with 740+. Each 20-point credit score improvement can save thousands over the loan term.
What are closing costs for first-time buyers?
Closing costs typically run 2–5% of the loan amount. On a $300,000 home, expect $6,000–$15,000 in closing costs. Many states offer first-time buyer programs that cover or reduce closing costs.