It's at the top end of your price point, but if you're careful and patient you can usually find a Leica R 90 2.8 Elmarit lens for $300-$350 US. Put a $15 Chinese R to F adapter on it and you will have one of the best portrait lenses in the world. It will just have to be shot in stop down metering mode, which is still very fast w/ a Nikon body that offers that. It's manual focus of course, which for me is actually better for portraits.
I went round and round w/ this too. A Nikkor 85 2 is pretty close IQ in some portrait instances, but there's a lot of sample variation w/ this lens. All of the Leica R Elmarits will be superb, but watch out for fungus and haze if you are interested in buying one. Too expensive to have cleaned (it's a Leica, and built to NASA type standards), so start w/ a clean one.
The inexpensive answer is use a Canon FD body like an AE-1 program or a FT QL/FTb specifically for portraits. No AF, but you can use either a FD 135 2.5 lens on it ($60 for the lens) or a really, really good FD 85 1.8 ($200). Trust me, I tried every Nikon lens from 85 to 105 known to man and none of them were as good as these Canons, which are pretty close to the Leica R. The Nikon 85 1.8 has some less-than-ideal bokeh, which is the Nikon story in a nutshell. Sharp, but busy, edgy bokeh, or little hexagon highlights in your bokeh/background like the 85 2. The non AI 50 2.8 is a gem w/ bokeh, but it's a 50. My experiences w/ the much revered Nikon 105 2.5 were that it was too sharp for portraits, and didn't measure up to even the Canon FD lenses I mentioned, much less the Leica. Again, less than stellar bokeh is the issue, along w/ being too sharp.
[not my photo, but did get permission]
