Research question
At the standard 28% front-end housing ratio, what home price is affordable at incomes from $60k to $200k — on a full PITI basis, not principal-and-interest alone?
Dataset
- Six gross annual incomes from $60,000 to $200,000.
- 28% front-end housing ratio (monthly housing ≤ 28% of gross monthly income).
- Full PITI: 20% down, 6.71% (PMMS), 1.1% property tax, $150/mo insurance.
Methodology
- Monthly housing budget = gross monthly income × 0.28.
- Invert the full PITI model (P&I + tax + insurance) to solve for the price that fits that budget.
- Report the supported price per income; keep rate, tax and insurance constant.
Calculations
| Gross income | 28% housing budget / mo | Supported home price |
|---|---|---|
| $60,000 | $1,400 | $205,481 |
| $80,000 | $1,867 | $282,179 |
| $100,000 | $2,333 | $358,880 |
| $120,000 | $2,800 | $435,515 |
| $150,000 | $3,500 | $550,635 |
| $200,000 | $4,667 | $742,392 |
20% down, 6.71% 30-yr, 1.1% tax, $150/mo insurance. Excludes other debts (the 36% back-end rule adds car/student/credit payments).
Supported home price by income (28% front-end)
Full PITI, 20% down, 6.71%.
$60k income$205,481
$80k income$282,179
$100k income$358,880
$120k income$435,515
$150k income$550,635
$200k income$742,392
Findings
- Affordable price scales roughly linearly with income at a fixed rate — doubling income nearly doubles the supported price.
- The 28% front-end ratio ignores existing debts; a borrower with large car/student payments can afford materially less at the same income.
- Property tax and insurance eat a fixed slice of the budget, so a high-tax state supports a lower price at the same income.
Limitations
- Ignores the 36% back-end ratio and any non-housing debt.
- Assumes 20% down — a smaller down payment adds PMI and lowers the supported price.
- Excludes HOA dues and maintenance, which reduce real affordability.
Sources
Last updated & change history
Last updated: 2026-09-21
- 2026-09-21 — Initial study.