How Much House Can You Afford on a $60K Salary?

The Baseline: What $60,000 Per Year Gets You

If you earn a $60,000 annual salary, you are right at the median individual income in the United States (the median was $59,540 in 2025, per the Bureau of Labor Statistics). You are in the heart of the American workforce, and yes, you can buy a home at this income level, though how much house you can afford depends heavily on your debts, savings, and location.

Let us start with the fundamental math:

Gross monthly income: $60,000 / 12 = $5,000
Net monthly income (estimated): After federal income tax, state tax (varies), Social Security, and Medicare, your take-home pay is roughly $3,800-$4,200 depending on your state and tax situation. We will use $3,950 as a national average.

The 28/36 Rule: Your Affordability Framework

Lenders and financial advisors use the 28/36 rule to determine how much housing you can afford:

28% front-end ratio: Your total monthly housing payment (principal, interest, property taxes, homeowner's insurance, and PMI/HOA) should not exceed 28% of your gross monthly income. At $5,000/month gross, that is $1,400 maximum.
36% back-end ratio: Your total monthly debt payments (housing + car loans + student loans + credit cards + any other debt) should not exceed 36% of gross income. At $5,000/month, that is $1,800 maximum total debt.

These ratios are not just guidelines. They are the thresholds most lenders use for conventional loan qualification. FHA loans are somewhat more lenient, allowing up to 31% front-end and 43% back-end in many cases, and some lenders will push to 50% back-end DTI with strong compensating factors (excellent credit, large reserves, stable employment history).

Translating the 28% Rule Into a Home Price

Working backward from the $1,400 maximum housing payment at current 2026 mortgage rates:

Estimated property taxes: Nationally average about 1.1% of home value annually, or roughly $206/month on a $225,000 home.
Homeowner's insurance: Averaging about $1,500-$2,000/year nationally, or roughly $146/month.
PMI (private mortgage insurance): Required with less than 20% down on conventional loans. Typically 0.5-1.0% of the loan amount annually. At 5% down on a $225,000 home, PMI is approximately $89-$178/month. We will use $112/month as a midpoint.
Available for principal and interest: $1,400 - $206 (taxes) - $146 (insurance) - $112 (PMI) = $936/month for P&I

At a 6.38% mortgage rate with 5% down (95% LTV), a $936 monthly P&I payment supports a loan of approximately $150,000, which corresponds to a home price of roughly $158,000.

Wait, that seems low. And it is. The reality is that the 28% rule at $60K with all housing costs included is quite restrictive. Many buyers in this income bracket stretch to 30-32% front-end DTI, which lenders often allow with good credit. At 31% ($1,550/month for housing), the math improves to a home price of approximately $190,000. And with FHA's more generous 31% front-end guideline and lower PMI, you can reach approximately $210,000-$225,000.

Use our home affordability calculator to run these numbers with your exact tax rate, insurance costs, and target down payment.

How Existing Debt Changes Everything

The 28% rule tells you the maximum you can spend on housing. But the 36% back-end rule often becomes the binding constraint for borrowers with existing debt. This is where the home affordability picture changes dramatically on a $60K salary.

Your Debt Budget

At $5,000 gross monthly income, the 36% back-end ratio allows $1,800 in total monthly debt payments. If your housing payment takes $1,400 (the 28% maximum), that leaves only $400 for all other debts. But here is the problem: most Americans have more than $400/month in non-housing debt.

Scenario 1: No Existing Debt (Best Case)

Monthly non-housing debt: $0
Full $1,800 back-end DTI available
Maximum housing payment: $1,400 (limited by front-end ratio)
Approximate max home price (FHA, 3.5% down, 6.38% rate): $225,000
Monthly P&I: $1,389 on a $217,125 loan. Add taxes (~$206), insurance (~$146), and MIP (~$100) = $1,841. This slightly exceeds the 36% ratio, so the real max is closer to $220,000.

Scenario 2: Student Loans Only ($300/month)

Monthly non-housing debt: $300 (roughly $35,000 in student loans on a standard 10-year plan)
Back-end DTI available for housing: $1,800 - $300 = $1,500
But front-end ratio caps housing at $1,400
The back-end constraint does not bind here, so the front-end ratio is still the limiter
Approximate max home price: $220,000 (similar to Scenario 1 because the 28% limit is binding)

Scenario 3: Student Loans + Car Payment ($300 + $350 = $650/month)

Monthly non-housing debt: $650
Back-end DTI available for housing: $1,800 - $650 = $1,150
Now the back-end ratio ($1,150) is lower than the front-end limit ($1,400), making it the binding constraint
Available for P&I after taxes, insurance, PMI: approximately $686/month
Approximate max home price: $140,000
This is a dramatic reduction, illustrating how a car payment can slash your home-buying power by $80,000+

Scenario 4: Student Loans + Car Payment + Credit Card Minimums ($300 + $350 + $200 = $850/month)

Monthly non-housing debt: $850
Back-end DTI available for housing: $1,800 - $850 = $950
Available for P&I after taxes, insurance, PMI: approximately $486/month
Approximate max home price: $95,000
At this debt level, homeownership in most markets becomes extremely challenging. The priority should be paying down debt before buying.

The Lesson: Every $100/Month in Debt Costs You ~$15,000 in Home-Buying Power

This rule of thumb holds fairly consistently at current rates: each $100 per month in non-housing debt reduces your maximum home purchase price by approximately $15,000-$17,000. This is why financial advisors recommend aggressively paying down debt before buying a home. Paying off a $350/month car loan effectively adds $50,000-$60,000 to your home-buying budget.

If you have significant debt, consider using our debt payoff calculator to create a plan for eliminating high-payment debts before applying for a mortgage. Also review our debt payoff strategies guide for methods to accelerate your debt elimination.

Down Payment Scenarios: 3% vs. 5% vs. 10% vs. 20%

Your down payment size affects not just how much cash you need upfront but also your monthly payment (through PMI costs and loan size) and the total cost of the home over time. Here is how each down payment level plays out on a $225,000 home (the approximate max for a $60K salary with minimal debt).

3% Down Payment (Conventional or Fannie Mae HomeReady)

Down payment: $6,750
Loan amount: $218,250
Monthly P&I (6.38%): $1,362
PMI (estimated 0.7%): $127/month
Property taxes: $206/month
Insurance: $146/month
Total monthly payment: $1,841
Total interest paid (30 years): $272,070
Total PMI paid (until 20% equity, ~9 years): ~$13,716
Total cost of the home: $225,000 + $272,070 + $13,716 = $510,786

3.5% Down Payment (FHA)

Down payment: $7,875
Loan amount: $217,125
Monthly P&I (6.38%): $1,355
MIP (0.55% annually for FHA): $100/month
Upfront MIP (1.75% of loan): $3,800 (can be financed into the loan)
Property taxes: $206/month
Insurance: $146/month
Total monthly payment: $1,807
Note: FHA MIP is for the life of the loan with less than 10% down, unlike conventional PMI which drops at 20% equity.
Total interest paid (30 years): $270,680
Total MIP paid (life of loan): ~$36,000
Total cost of the home: $225,000 + $270,680 + $36,000 + $3,800 = $535,480

5% Down Payment (Conventional)

Down payment: $11,250
Loan amount: $213,750
Monthly P&I (6.38%): $1,334
PMI (estimated 0.6%): $107/month
Total monthly payment: $1,793
Total interest paid (30 years): $266,490
Total PMI paid (~8 years): ~$10,272
Total cost of the home: $225,000 + $266,490 + $10,272 = $501,762

10% Down Payment

Down payment: $22,500
Loan amount: $202,500
Monthly P&I (6.38%): $1,264
PMI (estimated 0.45%): $76/month
Total monthly payment: $1,692
Total interest paid (30 years): $252,540
Total PMI paid (~5.5 years): ~$5,016
Total cost of the home: $225,000 + $252,540 + $5,016 = $482,556

20% Down Payment

Down payment: $45,000
Loan amount: $180,000
Monthly P&I (6.38%): $1,124
PMI: $0 (not required with 20% down)
Total monthly payment: $1,476
Total interest paid (30 years): $224,640
Total cost of the home: $225,000 + $224,640 = $449,640

The Trade-Off

Putting 20% down saves you $61,146 over the life of the loan compared to 3% down ($510,786 vs $449,640). But it requires $38,250 more upfront. For someone earning $60K, saving $45,000 for a down payment could take years. The question becomes: is it better to wait 3-4 years to save 20%, or buy now with 3-5% down and start building equity?

In most cases, buying sooner with less down is the better choice, provided you can comfortably afford the monthly payment. Home price appreciation, even at a modest 2% per year, adds $4,500 annually to a $225,000 home. Waiting 3 years to save the extra down payment could cost you $13,500+ in missed appreciation, potentially more than the PMI savings. Run your own comparison with our mortgage payment calculator.

Property Taxes and Insurance: The Hidden Budget Killers

When most people think about affording a home, they focus on the mortgage payment. But property taxes and homeowner's insurance are significant costs that vary enormously by location and can make the difference between comfortable and unaffordable on a $60K salary.

Property Tax Rates by State

The national average effective property tax rate is approximately 1.1% of assessed home value per year. But state-by-state variation is extreme:

Lowest property tax states: Hawaii (0.27%), Alabama (0.37%), Louisiana (0.51%), Wyoming (0.55%), Colorado (0.55%). On a $225,000 home in Hawaii, annual property taxes would be just $608 ($51/month).
Highest property tax states: New Jersey (2.21%), Illinois (2.08%), Connecticut (1.96%), New Hampshire (1.93%), Vermont (1.83%). On a $225,000 home in New Jersey, annual property taxes would be $4,973 ($414/month).
The difference: Between the lowest and highest property tax states, you could pay $363 more per month on the same-priced home. That $363/month difference is equivalent to roughly $55,000-$60,000 in home-buying power.

How Property Taxes Affect Your Buying Power

On a $60K salary, here is how the same income buys different amounts of home depending on property tax rates:

Low property tax state (0.5%): Max home price approximately $240,000 (because less of your $1,400 budget goes to taxes, leaving more for P&I)
Average property tax state (1.1%): Max home price approximately $220,000
High property tax state (2.0%): Max home price approximately $185,000

This is a $55,000 range based solely on where you choose to live. If you have flexibility in location, choosing a low-property-tax area can dramatically increase your purchasing power.

Homeowner's Insurance: Rising Costs in 2026

Insurance costs have been a major and often overlooked affordability headwind in recent years:

National average: Homeowner's insurance premiums have risen to approximately $1,750/year ($146/month) for a $225,000 home, up 21% from 2023 levels.
High-risk states: In Florida, Louisiana, and Texas, average premiums are significantly higher due to hurricane and severe weather risk. A $225,000 home in Florida might carry insurance premiums of $3,000-$5,000/year ($250-$417/month).
Climate risk is driving costs: Insurers are repricing risk based on wildfire exposure (California), hurricane frequency (Gulf Coast, Southeast), and severe hailstorm activity (Midwest). Several major insurers have pulled out of high-risk markets entirely.

Example: Same Home, Different Locations

Consider a $200,000 home in three different locations, all on a $60K salary with 5% down at 6.38%:

Birmingham, Alabama:

P&I on $190,000 loan: $1,186
Property taxes (0.37%): $62/month
Insurance: $125/month
PMI: $95/month
Total: $1,468/month (29.4% of gross income) - Comfortable

Columbus, Ohio:

P&I on $190,000 loan: $1,186
Property taxes (1.53%): $255/month
Insurance: $138/month
PMI: $95/month
Total: $1,674/month (33.5% of gross income) - Stretching

Suburban Houston, Texas (no income tax but high property tax + insurance):

P&I on $190,000 loan: $1,186
Property taxes (1.81%): $302/month
Insurance: $275/month (higher due to hurricane/flood risk)
PMI: $95/month
Total: $1,858/month (37.2% of gross income) - Over-stretched, exceeds 36% DTI

The identical $200,000 home ranges from comfortable to over-stretched depending purely on location. For $60K earners, choosing a location with low property taxes and moderate insurance costs can be the single most impactful affordability decision. Use our home affordability calculator to input your specific location's tax rate and insurance estimates for an accurate picture.

Real Buyer Scenarios on a $60K Salary

Let us walk through three realistic buyer profiles at $60K income to show the range of possible outcomes. These scenarios reflect the diversity of financial situations people face when trying to buy their first home.

Scenario A: Sarah, 28, Minimal Debt, Renting in Indianapolis

Financial profile:

Salary: $60,000 (hospital administrative coordinator)
Monthly debts: $150/month student loan payment ($12,000 remaining)
Savings: $14,000 (checking and savings combined)
Credit score: 715
Current rent: $1,050/month for a 1-bedroom apartment

Analysis:

28% front-end max: $1,400/month
36% back-end max: $1,800 - $150 debt = $1,650 available for housing
Front-end ratio is the binding constraint at $1,400
Indianapolis median home price: $265,000 (above her budget)
Affordable home price with 5% down, 6.38% rate, IN property taxes (0.81%): approximately $215,000

Action plan:

Sarah can comfortably afford a $200,000-$215,000 home in the Indianapolis area, where there are plenty of options: older 3-bedroom homes in Fountain Square, Irvington, or Beech Grove.
With $14,000 saved, she can put 5% down ($10,750) and cover closing costs (~$6,500) with help from Indiana Housing (IHCDA) down payment assistance of up to $11,000.
Her monthly payment on a $200,000 home would be approximately $1,315, below the $1,400 cap and only $265 more than her current rent.
Verdict: Ready to buy now.

Scenario B: Marcus, 32, Moderate Debt, Renting in Phoenix

Financial profile:

Salary: $60,000 (logistics coordinator)
Monthly debts: $285/month student loans + $410/month car payment = $695 total
Savings: $9,500
Credit score: 670
Current rent: $1,400/month for a 2-bedroom apartment

Analysis:

28% front-end max: $1,400
36% back-end max: $1,800 - $695 debt = $1,105 available for housing
Back-end ratio is the binding constraint at $1,105
Phoenix median home price: $415,000 (far above his budget)
Affordable home price with FHA 3.5% down, 6.38% rate, AZ property taxes (0.51%): approximately $150,000

Action plan:

At $150,000, Marcus is priced out of most of Phoenix proper. Options are limited to older condos, manufactured homes, or communities 30-40 minutes outside the city in areas like Buckeye or Maricopa.
The car payment is the biggest obstacle. If Marcus can pay off or refinance to a lower payment, his buying power increases dramatically.
Better strategy: Aggressively pay down the car loan ($410/month) over the next 12-18 months. Eliminating it would increase his affordable home price to approximately $215,000, opening up far more options.
He should also use Arizona's AzIDA HOME+ program for up to 5% down payment assistance.
Verdict: Should focus on debt payoff first, then buy in 12-18 months.

Scenario C: The Dual-Income Advantage

What if you earn $60K but have a partner who also earns income? The math changes dramatically:

$60K + $40K combined ($100K household): Gross monthly $8,333. Max housing at 28%: $2,333. Affordable home price (5% down, 6.38%): approximately $350,000.
$60K + $60K combined ($120K household): Gross monthly $10,000. Max housing at 28%: $2,800. Affordable home price: approximately $425,000.

A second income is the single most powerful affordability lever available. It is not glamorous advice, but buying with a partner or spouse essentially doubles your housing budget. For single buyers on $60K, consider whether partnering with a trusted family member as co-borrower might be an option to expand your purchasing power.

Explore your scenarios with our home affordability calculator and use our mortgage payment calculator to see exact monthly payments at different price points.

Best Markets to Buy on a $60K Salary in 2026

Location is perhaps the most critical variable for a $60K earner looking to buy. The median U.S. home price of $387,000 is well out of reach, but dozens of markets offer quality homes at prices a $60K salary can support. Here are the best metros for buyers in this income range, factoring in home prices, property taxes, insurance, job markets, and quality of life.

Tier 1: Most Affordable (Max budget $200K-$225K gets a median-priced home)

Memphis, TN: Median home price $200,000. Low cost of living. Major FedEx, healthcare, and logistics employment hub. Property taxes moderate at 1.35%. No state income tax, giving you more take-home pay.
Birmingham, AL: Median $195,000. Very low property taxes (0.37%) and insurance costs. Growing UAB medical center and banking sector. Southern hospitality and affordability.
Little Rock, AR: Median $185,000. State capital with stable government employment. Low cost of living across the board. Property taxes at 0.61%.
Wichita, KS: Median $175,000. Aviation manufacturing (Spirit AeroSystems, Textron) provides solid employment. Extremely affordable with average property taxes around 1.33%.
Tulsa, OK: Median $195,000. Growing tech and energy sector. Low property taxes (0.88%) and no state income tax on the first $15,000 of income.

Tier 2: Affordable With Some Stretch (Median home $225K-$275K)

Indianapolis, IN: Median $265,000. Outstanding value for a metro of 2+ million people. Strong healthcare, logistics, tech sectors. Property taxes a bit high at 0.81% but overall cost of living is low. Many homes in the $200,000-$225,000 range available in suburbs.
Columbus, OH: Median $290,000. Intel chip fabrication facility is creating thousands of jobs. The $200,000-$225,000 range gets you into solid neighborhoods east and south of downtown.
San Antonio, TX: Median $275,000. Military, healthcare, and cybersecurity employment. No state income tax. Higher property taxes (1.81%) but offset by zero income tax.
Kansas City, MO-KS: Median $260,000. Growing tech and finance sectors. Plenty of homes in the $180,000-$220,000 range in the broader metro.
Louisville, KY: Median $240,000. Healthcare and logistics hub (UPS Worldport). Property taxes reasonable at 0.80%. Good quality of life.

Tier 3: Stretch But Possible (Need DPA or strategic buying)

Raleigh-Durham, NC: Median $395,000 (above budget for median), but homes in the $200,000-$225,000 range exist in surrounding areas like Clayton, Fuquay-Varina, and Burlington. Strong tech and biotech job market.
Tampa, FL: Median $355,000 (above budget), but opportunities in eastern Hillsborough County and Pasco County in the $200,000-$250,000 range. Use Florida Hometown Heroes DPA ($35,000) to bridge the gap. Watch insurance costs carefully.
Las Vegas, NV: Median $370,000, but condos and homes in North Las Vegas and Henderson offer options in the $200,000-$240,000 range. No state income tax. Nevada Home Is Possible DPA can help with down payment.

Markets to Avoid on $60K

These metros are generally not viable for a $60K single-income buyer unless you have significant savings or dual income:

San Francisco Bay Area: Median $1.1 million+
New York City: Median $750,000+ (Manhattan $1.1M+)
Los Angeles: Median $850,000+
Boston: Median $625,000+
Seattle: Median $720,000+
San Diego: Median $800,000+
Denver: Median $545,000+

For a comprehensive look at your options, use our home affordability calculator with your specific financial details. And read our first-time homebuyer guide for the complete step-by-step process from pre-approval to closing.

Strategies to Maximize Affordability on $60K

If the baseline math feels discouraging, take heart. There are concrete strategies to expand what you can afford on a $60K salary, some of which can add $25,000-$75,000 to your buying power.

Strategy 1: Eliminate High-Payment Debt Before Buying

As shown in the debt scenarios earlier, every $100/month in debt costs you approximately $15,000-$17,000 in home-buying power. If you have a $400/month car payment, paying off or paying down that car before buying adds roughly $60,000+ to your home budget. This is the single highest-impact action most $60K earners can take. Even aggressively paying down debt for 6-12 months before applying for a mortgage can make a transformative difference. Use our debt payoff calculator to create an accelerated payoff plan.

Strategy 2: Use Down Payment Assistance Programs

As covered in our DPA guide, the FHA's new zero-interest second mortgage program, state programs, and local grants can reduce your out-of-pocket costs to near zero. At $60K income, you qualify for most DPA programs since income limits are typically set at 120-150% of area median income. This means you can put your savings toward reserves rather than the down payment, making the overall financial picture much healthier.

Strategy 3: Consider an FHA Loan

FHA loans offer several advantages for $60K buyers:

Only 3.5% down payment (vs 5% minimum for many conventional loans at lower credit scores)
Credit scores as low as 580 (conventional typically requires 620+)
More flexible DTI ratios (up to 43% back-end, sometimes higher)
Gift funds allowed for the entire down payment

The downside is lifetime mortgage insurance premiums (MIP) with less than 10% down. But the FHA's MIP rate of 0.55% annually is actually comparable to or lower than conventional PMI for borrowers with credit scores below 720. For many $60K earners, FHA is the optimal loan product.

Strategy 4: Boost Your Income Before Applying

Lenders count all qualifying income, not just your base salary. Ways to increase your qualifying income include:

Overtime and bonuses: If you have a 2-year history of overtime or bonuses, lenders will average this income and add it to your qualifying amount. Even $200/month in averaged overtime adds roughly $30,000 in buying power.
Part-time or side income: A second job or freelance income can be counted if you have a 2-year history and it is reported on your tax returns.
Ask for a raise: A $5,000 raise (from $60K to $65K) adds approximately $20,000 in home-buying power. Time your home purchase after your annual review if a raise is likely.

Strategy 5: Negotiate Seller Concessions

In today's market with rising inventory and longer days on market, seller concessions are increasingly achievable. Ask the seller to pay for:

Closing costs (up to 6% of purchase price with FHA)
A temporary rate buydown (2-1 or 1-0 buydown)
Home warranty ($400-$600 first-year cost)
Needed repairs identified during inspection

On a $200,000 home, 3% in seller concessions saves you $6,000 in closing costs, money that stays in your pocket for reserves and moving expenses.

Strategy 6: Consider a 15-Year Mortgage (If You Can Afford It)

This is counterintuitive, but a 15-year mortgage at current rates (approximately 5.6-5.75%) has a lower interest rate, and while the payment is higher, you build equity dramatically faster and pay far less in total interest. On a $175,000 home with 5% down:

30-year at 6.38%: $1,038 P&I. Total interest: $207,255.
15-year at 5.70%: $1,387 P&I. Total interest: $83,400.
Savings: $123,855 in total interest, but $349/month higher payment.

If you can stretch your budget temporarily (perhaps buying a less expensive home), the 15-year path builds wealth significantly faster. After 5 years, you will have approximately $60,000 in equity versus about $15,000 on the 30-year, giving you far more options for your next move.

The bottom line: earning $60K is absolutely sufficient to become a homeowner in the right market with the right strategy. The key is managing your debts, leveraging assistance programs, and choosing a location where your income buys real purchasing power. Start by running your personalized numbers in our home affordability calculator.

2026 Reality Check: How Today's Rates Changed the $60K Equation

The rate environment in spring 2026 has dramatically reshaped what a $60,000 salary can buy compared to just a few years ago. Here is the concrete impact — and why it is actually improving.

Purchasing Power Lost and (Slowly) Recovering

At 6.38%, a $60K earner's maximum home price is approximately $200,000-$225,000. But look at how this has shifted over the past five years:

Year	30-Year Rate	Max Home Price ($60K, 5% Down, No Other Debt)	Difference from 2021
2021	2.96%	$310,000	—
2022 (peak)	7.08%	$180,000	-$130,000
2023	6.81%	$187,000	-$123,000
2025	6.62%	$193,000	-$117,000
Spring 2026	6.38%	$202,000	-$108,000
Forecast: late 2026	5.8-6.2%	$212,000-$222,000	-$88,000 to -$98,000

You have lost roughly $108,000 in purchasing power compared to pandemic-era rates. That is painful. But the trend is recovering — you have gained back about $22,000 in buying power since the 2022 peak, and forecasters project further improvement if the Fed cuts once more this year.

Where $60K Buys a Home in 2026

Geography is the single largest variable in a $60K buyer's equation. In some markets you can buy a solid 3-bedroom home; in others you cannot afford a studio condo. Here is what $200,000-$225,000 actually buys:

Market	Median Home Price	What $200-225K Buys	Property Tax Rate
Indianapolis, IN	$265,000	2-3 bed ranch, established neighborhood	0.83%
Kansas City, MO	$260,000	2-3 bed, updated older home	1.00%
Memphis, TN	$215,000	3 bed, at or above median	1.47%
Cleveland, OH	$210,000	3 bed, suburban, at median	1.56%
San Antonio, TX	$275,000	2 bed condo or smaller home in suburbs	1.68%
Tampa, FL	$355,000	Below median — studio/1 bed condo only	0.86%
Austin, TX	$410,000	Priced out of most inventory	1.67%

Notice the property tax column: in Texas, where there is no state income tax, property taxes run 1.5-2.0% — on a $200,000 home that is $3,000-$4,000/year, eating significantly into your 28% housing budget. In states like Indiana (0.83%) or Florida (0.86%), the same home costs $1,660-$1,720 in taxes. This difference alone can shift your affordable price range by $15,000-$20,000.

The New FHA Program: A Game-Changer for $60K Buyers

The FHA's zero-interest second mortgage program, launched January 2026, is specifically designed for buyers in your income range. At $60,000 income, you are below the 120% AMI threshold in most metropolitan areas, making you eligible for:

Up to $12,000-$15,000 toward down payment or closing costs (6% of a $200,000-$250,000 purchase)
0% interest — no monthly payment on the second mortgage
Fully forgiven after 36 on-time mortgage payments (3 years)

Combined with the base FHA loan (3.5% down), this means a $200,000 home requires as little as $7,000 down — and the FHA program covers all of it. Your net out-of-pocket could be under $2,000 for inspection, appraisal, and miscellaneous fees. This is the closest thing to a zero-down conventional purchase available in 2026.

Tariff Impact: Why New Construction Is Off the Table (For Now)

Trump administration tariffs on Canadian lumber, steel, and aluminum are adding $17,000-$22,000 to new home costs in 2026. For a $60K buyer with a $200,000 budget, this effectively prices out new construction entirely — a $200,000 home before tariffs now costs $217,000-$222,000 to build, and builders are not absorbing those costs.

The silver lining: existing home inventory is up 22% year-over-year, with days on market stretching to 47 days nationally. This gives $60K buyers more options and more negotiating leverage in the existing home market than at any point since 2019. Sellers are offering concessions — 21% of listings have price reductions, the highest share since Redfin began tracking.