Question 1

What income do I need to buy a $500,000 home?

Accepted Answer

For a $500,000 home with 20% down ($100,000), 6.75% rate, 30-year term, 1.2% property tax, 0.4% insurance, and no other debts at the 43% DTI cap, you need approximately $95,000–$105,000 in gross annual income. The exact amount changes based on your DTI limit and existing debts. Use this calculator with your specific numbers — adding $500/month of car or credit card debt increases the income need by approximately $14,000.

Question 2

Is the 28/36 rule still used in 2026?

Accepted Answer

Yes — the 28/36 rule (28% front-end housing DTI and 36% back-end total debt DTI) is the CFPB recommended target for sustainable homeownership. Most lenders allow higher DTIs (up to 43% standard, 45–50% with compensating factors), but the 28/36 rule remains the conservative target for protecting financial flexibility. If your DTI is above 36%, you have less buffer for emergencies.

Question 3

Can I include my partner's income to qualify?

Accepted Answer

Yes — joint mortgage applications use both incomes. Both applicants must qualify based on credit, debts, and income documentation. Lenders use the lower of the two FICO scores for pricing (per Fannie Mae rules). If only one applicant has high debt or weak credit, applying solo on the higher-credit/lower-debt partner may yield better pricing — but reduces the income available.

Question 4

How do self-employed buyers qualify?

Accepted Answer

Per Fannie Mae Selling Guide B3-3.2, self-employed buyers (Schedule C, 1099, or business owners) must provide 2 years of tax returns. Income is calculated as the 2-year average of Line 31 Schedule C net income (with depreciation added back). New self-employment with less than 24 months of history typically requires bank statement loans or alternative documentation programs.

Question 5

Does overtime or bonus income count?

Accepted Answer

Yes, if it has a 2-year history and is likely to continue. Per Fannie Mae, the lender uses a 2-year average of the overtime/bonus income, and the employer must confirm in writing that the income is expected to continue. One-time bonuses or recently started overtime usually do not count.

Question 6

What if my DTI is too high?

Accepted Answer

Three options to lower your DTI: (1) pay down existing debt — even paying off a single credit card can drop DTI by 2–3 percentage points, (2) lower the purchase price or increase the down payment to reduce PITIA, (3) add a co-borrower with stable income and low debt. Refinancing high-rate debt (like credit cards) into a lower-rate consolidation loan can also lower monthly payments and DTI.

Minimum Income for Mortgage Calculator

How Lenders Calculate Minimum Income for a Mortgage

The 2026 DTI Limits by Loan Type

What Counts as "Income" for Mortgage Qualification

Compensating Factors That Allow Higher DTI