House Affordability Calculator
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What Your Result Means
- Max Home Price (28% rule): The highest home price where your housing payment alone stays at or below 28% of gross monthly income — the front-end ratio most lenders use as a baseline.
- Max Home Price (36% rule): The highest home price where your housing payment plus all other monthly debts stays at or below 36% of gross monthly income — the back-end or total DTI ratio.
- Recommended Max: The lower of the two rules. Lenders typically require you to pass both, so the binding constraint is whichever produces the smaller number.
- Monthly Payment: The maximum principal-and-interest payment you can afford under the recommended limit. Actual payments will be higher once you add taxes, insurance, and PMI.
- Max Mortgage: The loan amount that produces the max monthly payment at your entered rate and term, derived from the standard amortization formula.
How This Calculator Works
You enter gross annual income, existing monthly debts, down payment savings, an expected interest rate, and loan term. The tool divides income by 12, applies the 28% and 36% thresholds, subtracts existing debts from the 36% cap, then takes the lower payment limit. It reverse-solves the standard amortization formula to find the mortgage that produces that payment, and adds your down payment for the total home price. It assumes a fixed-rate, fully-amortizing loan and does not include taxes, insurance, PMI, or HOA.
Quick Questions
What is the 28/36 rule?
It's a guideline most conventional lenders follow. Your monthly housing costs (principal, interest, taxes, insurance) should not exceed 28% of gross monthly income, and your total monthly debt payments should not exceed 36%. Some loan programs allow higher ratios — FHA goes up to 31/43 in many cases.
Does this include property taxes and insurance?
No. This calculator shows principal and interest only. Budget an additional 1–2% of home value per year for property taxes and $1,200–$2,500 per year for homeowners insurance. If your down payment is under 20%, add PMI as well.
Should I use gross or net income?
Use gross (pre-tax) income. Lenders base the 28/36 rule on gross income, not take-home pay. However, for personal budgeting, many advisors recommend keeping housing under 25–30% of net income to leave room for savings and other expenses.
What counts as "monthly debts"?
Include minimum payments on car loans, student loans, credit cards, personal loans, child support, and alimony. Do not include utilities, subscriptions, or groceries — lenders only count obligations that appear on your credit report.
Can I actually afford the maximum amount shown?
The maximum is a ceiling, not a recommendation. Most financial advisors suggest buying well below your maximum to leave room for maintenance, savings, and lifestyle. A common guideline is a home price of 3–4 times your annual income.
Sources
- Consumer Financial Protection Bureau — Debt-to-Income Ratio (explains the 28/36 guideline and how lenders use DTI)
- HUD — Types of Mortgage Loans (FHA, conventional, and VA loan qualification thresholds)
- IRS Publication 936 — Home Mortgage Interest Deduction (tax implications of mortgage interest)
Method & review
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.