How did Research Maniacs calculate how much house you can afford if you make $40,000?
Research Maniacs checked with different financial institutions and found that most mortgage
lenders do not allow more than 36 percent of a gross income of $40,000 to cover the total cost of
debt payment(s), insurance, and property tax.
Thus, in doing our calculations here, we assumed 2 percent
for insurance and property tax and 34 percent for principal and interest. Any down payment you have
will increase how much house you can afford, and any other current debt payments will decrease how much house you can
You may also be interested in our Mortgage FAQ page.