If you earn $70,000 a year, a comfortable home price is roughly $180,000 to $230,000 at late-2026 mortgage rates. Where you land in that range depends mostly on two things: how much you can put down, and how much other debt you already pay each month. This guide walks through the math one step at a time, so you can redo it with your own numbers in the Mortgage Calculator.
Step 1: Start with the 28% rule
Lenders and financial planners often use a simple guideline: your total monthly housing payment should be no more than 28% of your gross monthly income (your pay before taxes).
- $70,000 ÷ 12 months = $5,833 a month before taxes
- $5,833 × 28% = $1,633 a month for housing
That $1,633 has to cover everything that comes with the house, not just the loan. The second half of the rule says that all your monthly debt payments together, housing included, should stay under 36% of gross income. On a $70,000 salary that is $2,100 a month. We’ll come back to that in Step 3.
Step 2: Know what goes into the monthly payment
A monthly mortgage payment usually has four or five parts:
- Principal and interest – the loan itself, paid off over 30 years
- Property tax – set by your city or county
- Homeowners insurance – required by the lender
- PMI (private mortgage insurance) – added when you put down less than 20%
- HOA fees – only if the home is in a homeowners association
For the examples below, I used these assumptions:
- Interest rate: 7.2% on a 30-year fixed loan. Freddie Mac’s weekly survey put the average at 7.18% on November 5, 2026.
- Property tax: 1% of the home price per year. The national average is close to 1%, but real rates run from about 0.3% (Hawaii) to over 2% (New Jersey and Illinois).
- Insurance: $2,400 a year ($200 a month). National averages in 2026 are around $2,400 to $2,500.
- PMI: 0.6% of the loan per year with 10% down, 0.8% with 5% or less. PMI typically runs 0.46% to 1.5%, and a better credit score gets a lower rate.
- No HOA fees and no other debts (for now).
How much house $1,633 a month buys
| Down | Cash down | Price | Loan | Tax | Ins. | PMI |
|---|---|---|---|---|---|---|
| 20% | $45,800 | $228,800 | $1,243 | $191 | $200 | — |
| 10% | $19,400 | $193,900 | $1,185 | $162 | $200 | $87 |
| 5% | $9,100 | $181,100 | $1,168 | $151 | $200 | $115 |
| 3.5% | $6,300 | $178,600 | $1,170 | $149 | $200 | $115 |
Two things stand out. First, a bigger down payment buys more house, because you borrow less and skip PMI. Second, even 20% down tops out around $229,000. That is a long way below the national median home price, which has been above $400,000 for most of 2026.
Checking one row
Take the 10% down example. A $193,900 home with $19,400 down leaves a loan of $174,500.
- Principal and interest at 7.2% for 30 years: about $1,185
- Property tax ($193,900 × 1% ÷ 12): about $162
- Insurance: $200
- PMI ($174,500 × 0.6% ÷ 12): about $87
- Total: about $1,633, right at the 28% limit
You can check this yourself: enter $193,900, $19,400 down, 7.2%, 30 years, $1,939 tax, and $2,400 insurance in the Mortgage Calculator. It shows the payment without PMI, so add the $87 on top.
Step 3: Subtract your other debts
The 36% rule is where car loans, student loans, and credit cards come in. Your housing payment plus all other monthly debt payments should stay under $2,100.
- $300 a month in other debt: $2,100 − $300 = $1,800. The 28% limit ($1,633) is still lower, so nothing changes. With 10% down you can still look at homes around $194,000.
- $500 a month: $2,100 − $500 = $1,600. Now the 36% rule is the tighter one, and the 10%-down budget drops to about $189,400.
- $800 a month (say, a car payment plus student loans): $2,100 − $800 = $1,300 a month for housing. The 10%-down budget falls to about $148,800.
So paying off a car loan before you buy can raise your home budget by tens of thousands of dollars. The Loan Calculator shows how fast extra payments clear a loan.
What if mortgage rates come down?
Rates change every week, and a single percentage point makes a real difference. At 6.2% instead of 7.2%, the same $1,633 a month buys:
- about $250,000 with 20% down (up from $229,000)
- about $211,000 with 10% down (up from $194,000)
- about $197,000 with 5% down (up from $181,000)
That is roughly $16,000 to $21,000 more house for each point the rate falls. If you are not in a hurry, it can make sense to save a larger down payment while you watch rates.
The cash you need on closing day
The down payment is not the only money you need up front. Before you start shopping, plan for:
- Closing costs, commonly 2% to 5% of the price. On a $194,000 home that is about $3,900 to $9,700.
- An emergency fund of at least three months of expenses, because a water heater or roof can fail in the first year.
- Ongoing maintenance, often budgeted at about 1% of the home’s value per year, or roughly $160 a month on a $194,000 house.
A reality check
A $420,000 home, close to the national median, would cost about $2,830 a month with 20% down at today’s rates. By the 28% rule, that takes an income of roughly $121,000 a year. On $70,000, the realistic paths are:
- buying in a lower-cost city or county, where $180,000 to $230,000 still buys a full house
- looking at condos, townhomes, or smaller starter homes
- buying with a partner or co-borrower whose income counts too
- asking about FHA loans (3.5% down) or first-time buyer programs in your state
Common questions
Is the 28% rule a law?
No. It is a guideline. Each loan program sets its own debt-to-income limits, and some lenders approve borrowers well above 28% or 36%. Being approved for a bigger loan does not mean the payment will feel comfortable, though. Many buyers aim lower so they can still save and handle surprises.
Should I use my gross or take-home pay?
The rule uses gross pay, before taxes. If your take-home pay is much lower because of high state taxes, retirement contributions, or health insurance costs, it is wise to aim below 28%.
How long would it take to save 20% down?
On a $229,000 home, 20% is about $46,000. Saving $750 a month in a high-yield account at 4% interest gets there in a little under five years. Use the Compound Interest Calculator to try your own monthly amount.
Try it with your own numbers
Every situation is different, so treat the figures above as a starting point. Open the Mortgage Calculator, enter your target price, down payment, and the tax and insurance rates for the area you are considering, and compare the result with 28% of your monthly income.
This guide is for general education and is not financial advice. Rates and averages are as of early November 2026. Talk with a licensed lender for figures that fit your situation.