How Much House Can I Afford on a $85K Salary?

Earning $85K a year means your gross monthly income is $7,083. Under the 28/36 rule, your total housing payment — including principal, interest, property taxes, and insurance — should stay below $1,983 per month. With your current monthly debts of $300, the 36% back-end ratio further caps your total debt payments at $2,550 per month. This gives you a maximum home purchase price of approximately $278K with 10% down at 6.5%.

At $85K, you're in a competitive position for conventional financing. Your max purchase price of $278K with 10% down means a loan of $250K, well within conforming loan limits ($806,500 in most areas for 2026). This gives you access to the best conventional rates. If you can stretch to 20% down ($55,511), you eliminate PMI and reduce your monthly payment by approximately $130/month compared to 10% down.

Your $278K budget puts roughly 20-25 states within reach at the median price level. The best value markets include Ohio, Indiana, Missouri, and Iowa — all offer strong infrastructure, growing job markets, and median prices well within your budget. In pricier states, target cities 30-60 minutes from major metros where prices drop 25-35% but access to employment remains strong.

Your next step: get pre-approved. A pre-approval letter based on your $85K income tells sellers you're serious and confirms your $278K budget with a real lender. It also locks in a rate for 60-90 days, protecting you from rate increases while you shop. Before applying, check your credit report (free at annualcreditreport.com), save at least $27,756 for your 10% down payment plus $5,551–$11,102 for closing costs, and gather your last 2 years of tax returns and W-2s.