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Home affordability · $40K salary
How much house can I afford on a $40K salary?
On a $40K salary ($40,000 a year), with $500 a month in other debts and 10% down, you can comfortably afford a home of about $87,000. That follows the 28/36 rule at about 7.35% for a 30-year mortgage (October 2026 average). Lenders often approve more: up to about $117,000 at 43% debt-to-income.
The answer
Monthly cost
What a $87,000 home costs each month
| Cost | Per month |
|---|---|
| Principal and interest | $539 |
| Property tax (1%) | $73 |
| Home insurance | $36 |
| Mortgage insurance (PMI) | $46 |
| Housing payment lenders count | $693 |
| Upkeep reserve (1% a year) | $73 |
| Real monthly cost | $766 |
That is 23% of gross income once upkeep is counted. You would need about $11,400 at closing: $8,790 down plus $2,610 in closing costs. At this income your $500 in other debts is what caps the price: housing plus debts reach 36% of income first. Paying debts down would raise it.
Other debts
How car loans and student loans change it
Under the 28/36 rule, debts up to about $267 a month (8% of income) don't lower the comfortable price, because the 28% housing limit applies first. Above that, and at every level under the 43% stretch, each dollar of debt payments reduces the house.
| Other debts per month | Comfortable (36%) | Stretch (43%) |
|---|---|---|
| $0 | $117,000 | $179,000 |
| $250 | $117,000 | $148,000 |
| $500 | $87,000 | $117,000 |
| $1,000 | — | $54,000 |
| $1,500 | — | — |
Mortgage rates
How the rate changes it
A one-point drop in rates buys noticeably more house on the same income.
| 30-year rate | Comfortable price | Principal and interest |
|---|---|---|
| 6.35% | $95,000 | $532 |
| 6.85% | $91,000 | $536 |
| 7.35% (today) | $87,000 | $539 |
| 7.85% | $84,000 | $546 |
| 8.35% | $81,000 | $552 |
Down payment
How your down payment changes it
Under 20% down you pay mortgage insurance (PMI) until you owe 80% of the price.
| Down payment | Comfortable price | PMI | Cash needed at closing |
|---|---|---|---|
| 3% down | $82,000 | $46/mo | $5,000 |
| 5% down | $83,000 | $46/mo | $6,700 |
| 10% down | $87,000 | $46/mo | $11,400 |
| 20% down | $103,000 | None | $23,700 |
Questions
Common questions
What mortgage payment can I afford on a $40K salary?
Under the 28/36 rule, up to about $700 a month for the mortgage, property tax, insurance and PMI, with $500 in other debts. Lenders that allow 43% debt-to-income would count up to $933.
Is $40K enough to buy a house?
At about 7.35% rates and 10% down, $40K comfortably supports a home around $87,000, needing about $11,400 saved for the down payment and closing. Whether that buys a house depends on local prices.
Assumptions
How we worked it out
- Gross household income $40,000 a year ($3,333 a month).
- $500 a month in other debt payments, such as a car or student loan.
- 10% down, 3% closing costs, good credit (700-759), 30-year fixed at 7.35%.
- Property tax 1% of the price a year, home insurance about 0.5%, PMI under 20% down, no HOA.
- Upkeep reserve 1% of the price a year, for a home 10 to 30 years old.
- Comfortable is the 28/36 rule: housing under 28% of gross income and all debts under 36%.
Change any of these in the home affordability calculator.
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