How much house can I afford on $120,000 a year with $300 of monthly debt and $20,000 down?
$399,706
On $120,000 a year with $300 a month of other debt, the 28/36 rule supports about $2,800 a month of housing cost — roughly a $399,706 house with $20,000 down at 6.5% over 30 years.
How it is worked out
Lenders cap two ratios: housing alone at about 28% of gross income, and housing plus every other debt at about 36%. The lower of the two binds. The 28% housing limit binds here. That has a consequence worth knowing: other debt changes nothing at all until it passes $800 a month — the gap between the two limits, which is 8% of gross monthly income. At $300 you are below that, so paying it off would not raise this figure by a penny.
min($10,000 × 28%, $10,000 × 36% − $300) = $2,800 housing; less $400 tax and insurance leaves $2,400 for principal and interest, which supports a $379,706 loan
This is what a lender would approve, which is not the same as what is comfortable to live on — the ratios use gross income, so they are drawn on money you never receive. Tax and insurance are assumed at $400 a month and vary enormously by location; HOA fees, PMI below 20% down, and maintenance are all on top.
Open the full house affordability calculator to use your own figures.
Similar questions
- $40,000/yr = $84,379
- $40,000/yr · $20,000 down = $104,379
- $40,000/yr · $50,000 down = $134,379
- $40,000/yr · $100,000 down = $184,379
- $40,000/yr · $300 debt = $79,105
- $40,000/yr · $300 debt · $20,000 down = $99,105
Questions
- How much house can I afford on $120,000 a year with $300 of monthly debt and $20,000 down?
- On $120,000 a year with $300 a month of other debt, the 28/36 rule supports about $2,800 a month of housing cost — roughly a $399,706 house with $20,000 down at 6.5% over 30 years. min($10,000 × 28%, $10,000 × 36% − $300) = $2,800 housing; less $400 tax and insurance leaves $2,400 for principal and interest, which supports a $379,706 loan.
- How is this worked out?
- Lenders cap two ratios: housing alone at about 28% of gross income, and housing plus every other debt at about 36%. The lower of the two binds. The 28% housing limit binds here. That has a consequence worth knowing: other debt changes nothing at all until it passes $800 a month — the gap between the two limits, which is 8% of gross monthly income. At $300 you are below that, so paying it off would not raise this figure by a penny.
- Can I use my own figures?
- Yes — the house affordability calculator takes any values and shows the full result.