Most affordability advice starts with a house price and works down to a payment. That is backwards. Start with your income, subtract what taxes and insurance take before principal ever gets a dollar, and the honest number is usually well below what buyers assume — on a $7,500 monthly income at 6.68%, closer to $267,000 than $400,000.
You’ll see loan amounts by income band at today’s rate, why the escrow portion eats more of your budget than expected, and how existing debt changes the answer.
Working Backwards, Step by Step
Take a household grossing $7,500 a month. A 28% front-end ratio allows $2,100 for the total housing payment. But that $2,100 is not principal and interest — it covers property taxes, homeowners insurance and any mortgage insurance too.
Assume $400 a month for taxes and insurance, which is conservative in many markets. That leaves $1,700 for principal and interest. At 6.68%, $1,700 a month supports a loan of roughly $267,000. With 10% down, that is a purchase price near $297,000 — not the $400,000 many buyers at that income expect.
Loan Amounts by Income at Today’s Rate
The table below applies a 28% front-end ratio, subtracts an assumed $400 monthly for taxes and insurance, and converts the remaining budget into a 30-year loan amount at 6.68%. It assumes no other monthly debt.
| Gross monthly income | 28% housing budget | Available for P&I | Approx. loan supported |
|---|---|---|---|
| $5,000 | $1,400 | $1,000 | about $157,000 |
| $6,250 | $1,750 | $1,350 | about $212,000 |
| $7,500 | $2,100 | $1,700 | about $267,000 |
| $10,000 | $2,800 | $2,400 | about $377,000 |
| $12,500 | $3,500 | $3,100 | about $487,000 |
| $15,000 | $4,200 | $3,800 | about $597,000 |
Two caveats make these figures conservative rather than pessimistic. In high-tax counties, $400 a month for taxes and insurance is low — $700 or more is common, and every extra $100 of escrow removes roughly $15,700 of loan capacity at this rate. And putting less than 20% down adds mortgage insurance, which comes out of the same budget. Run your actual tax and insurance figures through our affordability calculator rather than trusting a table.
What Existing Debt Does
The 28% front-end ratio is only half the test. The back-end ratio counts every monthly debt obligation, and that is where most files actually bind. Conventional loans commonly allow 45% and up to 50% through automated underwriting; FHA allows 43% and stretches to 50% with compensating factors.
On $7,500 of income, a 45% back-end ceiling gives $3,375 for all debt. A $500 car payment and $300 in student loans leave $2,575 for housing — more than the 28% front-end allowed, so the front-end binds first. But add another $600 of obligations and the back end becomes the constraint, and the loan amount drops regardless of the front-end math. Our breakdown of where DTI limits actually land by program covers which ceiling applies to you.
Three Ways to Move the Number
Retire a monthly payment, not a balance. Underwriting counts the monthly obligation, not the total owed. Paying off a $4,000 car loan with a $500 payment frees $500 of ratio; paying $4,000 against a $30,000 student loan usually frees nothing, because the payment does not change.
Improve your rate, not just your down payment. A better credit bracket lowers the payment on the same loan, which raises the loan the same budget supports. See what a bracket is worth in our analysis of what a credit score costs per month.
Compare programs, not just prices. FHA’s lower down payment can raise the price you reach while its mortgage insurance reduces what the ratio allows — the two effects pull in opposite directions, so the winner is loan-specific. Model both with the mortgage calculator and the FHA calculator before deciding.
The bottom line
- At 6.68%, a $7,500 monthly income supports roughly a $267,000 loan under a 28% front-end ratio.
- Taxes and insurance come out of the same 28% budget — every extra $100 of escrow removes about $15,700 of loan capacity.
- The back-end ratio, not the front-end, is what binds most files with existing debt.
- Paying off a small loan with a large monthly payment helps more than paying down a large balance with a small one.
- These figures assume no mortgage insurance; under 20% down, subtract it from the housing budget.
Frequently Asked Questions
How much house can I afford on a $90,000 salary?
At $7,500 a month gross and a 28% front-end ratio, the housing budget is $2,100. After roughly $400 for taxes and insurance, that supports a loan near $267,000 at current rates, before accounting for other debts.
Does the 28% include property taxes and insurance?
Yes. The front-end ratio covers the full housing payment: principal, interest, property taxes, homeowners insurance and any mortgage insurance or HOA dues.
Can I be approved above the 28% front-end ratio?
Frequently. The 28/36 rule is a guideline, not a lender requirement. FHA allows a 31% front end, and VA sets no front-end limit at all.
Should I use gross or net income?
Lenders use gross monthly income before taxes. Your own budgeting should use net income, which is why an approved payment can still feel tight.
Sources & further reading:
Consumer Financial Protection Bureau,
30-year conforming rate lock index via FRED.
