In 2025, many first-time buyers and growing families ask the same question: Can I afford to buy a house on a $70,000 salary?
In this guide, we’ll explain how lenders calculate affordability, what factors impact your homebuying budget and what kind of home price you can realistically finance with a $70K annual income.
What's in this article?
How do I estimate a home budget on a $70K income?
Before you start house hunting, estimating what you can afford—based on your income—is an indispensable first step.
Lenders typically start with your gross monthly income (before taxes) and then consider your debts, expenses and credit score to determine how much of a mortgage you can comfortably manage.
Use the 28/36 rule to estimate how much house you can afford
The 28/36 rule is a common guideline lenders use to determine your ability to repay your mortgage.
If you earn $70,000 per year, that translates to approximately $5,833 per month.
How it works
- 28% of your gross monthly income should go toward housing expenses, including your mortgage, property taxes, homeowners insurance and HOA fees (if applicable).
- 36% of your gross income is the maximum that should go toward all debts combined, including your mortgage, credit cards, car loans and student loans.
Example based on $70K salary
- Monthly income: $5,833
- 28% housing budget: $1,633 per month
- 36% total debt limit: $2,100 per month
If you have minimal debt, you could afford total monthly housing costs in the $1,600-$1,700 range.
Depending on your down payment, loan type, interest rate and local taxes, this could translate to a home priced between $180,000 and $270,000.
Keep in mind that the 28/36 rule is a starting point. Some loan programs—like FHA loans—offer more flexible guidelines, especially if you have good credit or a large down payment.
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What affects how much house you can afford?
In addition to your income, several other factors play a role in determining your homebuying budget.
- Debt-to-income ratio (DTI): Your DTI compares your monthly debt payments to your gross monthly income. Lenders typically look at two numbers:
- Front-end DTI: The percentage of your income that goes toward housing expenses
- Back-end DTI: The percentage of your income that covers all monthly debts, including credit cards, car loans, student loans and your future mortgage
- Most conventional lenders prefer a back-end DTI of 43% or lower, but Compass Mortgage allows up to 50%, depending on the specific loan program.
- Down payment size: The more money you can put down up front, the more home you can afford. A larger down payment lowers your loan amount and monthly payment and may even secure you a lower interest rate. Additionally, a down payment of 20% or more eliminates the need to pay private mortgage insurance (PMI).
- Interest rates: Lower interest rates increase your financial capacity, while higher rates reduce it. Even a change of 1% can impact your monthly payment by hundreds of dollars. Keep an eye on rates as you’re shopping. Compass Mortgage allows borrowers to lock in a favorable interest rate.
- Loan type: The most popular loan types—including conventional loans, FHA loans and VA loans—each have different rules and costs. For example, conventional loans allow down payments as low as 3%, while VA loans do not require a down payment. (VA loans are exclusively for active members or veterans of military service in the United States.)
- Property taxes, insurance and HOA fees: Many first-time buyers forget to include property taxes, insurance and HOA fees in their budget estimates. Your real estate agent can help you estimate the additional costs more accurately based on your location and property type.
Ways to boost your buying power on a $70K income
If you’re earning $70,000 per year and qualify for a home in the $180,000 to $270,000 range, you might wonder how to stretch your buying power toward the higher end.
Fortunately, there are a few smart financial moves you can make to help you increase what you’re eligible to borrow—and what you can comfortably afford.
Pay down debt and lower your DTI
Your DTI is one of the biggest factors lenders use to determine your loan amount.
If you focus on paying off credit cards, car loans or student loans before applying for a mortgage, you will lower your DTI and raise what you can afford to pay for a home.
Improve your credit score for better rates
Higher credit scores typically translate to lower interest rates, and lower rates mean lower monthly mortgage payments.
The following strategies help you build credit:
- Pay all of your bills and credit cards on time.
- Keep credit card balances low (ideally under 30% of your limit).
- Avoid opening new credit accounts before closing on a home.
Scores above 740 often qualify for the best rates, but any improvement can make a meaningful difference.
Save for a bigger down payment or use down payment assistance programs
A larger down payment improves affordability in multiple ways:
- Lowers your loan amount
- Improves your loan-to-value ratio (LTV)
- Helps you avoid PMI (if it’s 20% or higher)
For example, putting 10% down instead of 3% down could increase your home price range by thousands of dollars.
If saving up for a larger down payment is challenging, research state and local down payment assistance programs and first-time buyer grants.
Try a mortgage affordability calculator
The 28/36 rule is helpful, but mortgage affordability calculators take into account more detailed information.
Compass Mortgage offers the following calculators:
- Mortgage payment calculator: Helps buyers estimate monthly payments based on home price, down payment, interest rate and loan term (length of the loan)
- FHA loan and VA loan calculators: Show how affordability can shift with different loan types
- Loan comparison calculator: Compares two different loan options side by side
Mortgage calculators help you set a more realistic price range before you apply for a loan.
Find out exactly what you can afford
Online calculators and affordability rules are a great place to start, but applying with a trusted lender is the best way to understand what you can afford.
At Compass Mortgage, our distinctive Get Committed® program locks in your interest rate and provides a fully underwritten loan commitment even before you find the home you want to buy!
A loan commitment essentially has the power of a cash offer, showing the seller you’re fully approved financially and that your deal isn’t likely to fall through.
Apply with Compass Mortgage today to see how much home you can afford.