How much house can I afford on $40,000 a year?
By the CallARealtor team · Published November 3, 2026 · Updated November 3, 2026
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Taxes, insurance, PMI and HOA
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Home price you can afford on $40,000 a year
| Rate | 3.5% down | 5% down | 10% down | 20% down |
|---|---|---|---|---|
| 5.5% | $115,231 | $116,802 | $122,362 | $143,494 |
| 6.0% | $110,260 | $111,773 | $117,132 | $137,112 |
| 6.5% | $105,596 | $107,054 | $112,221 | $131,141 |
| 7.0% | $101,220 | $102,626 | $107,610 | $125,553 |
| 7.5% | $97,113 | $98,470 | $103,279 | $120,321 |
Assumptions: 30-year fixed loan, property tax 1.1% of the price per year, homeowners insurance $1,800 per year, PMI 0.5% of the loan per year when less than 20% is put down, no HOA dues. These are example figures; your taxes, insurance and rate will differ. Change them in the calculator above.
Effect of car loans, student loans and other debts
| Other debt payments | Housing budget | Max home price |
|---|---|---|
| $0/mo | $933 | $112,221 |
| $250/mo | $933 | $112,221 |
| $500/mo | $700 | $78,793 |
| $750/mo | $450 | $42,978 |
| $1,000/mo | $200 | $7,163 |
The 28/36 guideline caps housing at 28% of gross monthly income and all debts, including housing, at 36%. Some loan programs allow higher ratios, but a higher payment leaves less room in your budget. The calculator above is set to a $112,000 home with 10% down so you can see the full payment and schedule. Use the affordability calculator with your own debts and down payment.
Ready to look at homes in this range? Talk to a local buyer's agent. You can also plan your down payment savings.
FAQ
How much house can I afford on $40,000 a year?
About $112,000 at 6.5% with 10% down and no other debts, keeping housing costs (including estimated tax, insurance and PMI) at 28% of gross income, or $933 a month.
What monthly payment can I afford on $40,000?
About $933 a month for housing under the 28% guideline, less if your other debts push total debt payments above 36% of income.
Does a bigger down payment let me buy more house?
Yes. More down means a smaller loan and, at 20% or more, usually no PMI, so the same monthly budget covers a higher price. See the table above.
Sources: CFPB: Buying a house · Freddie Mac weekly mortgage rates · CFPB: What is PMI?
Info checked on November 3, 2026. All figures are estimates from the stated assumptions, not a loan offer. CallARealtor is not a lender or brokerage.