Home Affordability Calculator
Enter your gross annual income, monthly debt payments (car, student loans, etc.), available down payment, interest rate, and loan term. The calculator uses the 28/36 rule to estimate your maximum home price.
Maximum home price:
Maximum loan amount:
Max monthly payment:
How Much House Can You Afford?
Buying a home is the largest financial decision most people ever make. Before browsing listings or talking to a real estate agent, it is critical to understand your true buying power — not just what a bank might approve you for, but what you can comfortably afford without straining your finances.
This home affordability calculator uses the 28/36 rule — the industry-standard guideline used by mortgage underwriters, financial advisors, and lenders — to estimate the maximum home price you can responsibly purchase given your income, existing debts, down payment, and current interest rates.
The 28/36 Rule Explained
The 28/36 rule sets two limits on your housing-related debt:
The 28% Front-End Ratio — Your total monthly housing payment (mortgage principal + interest + property taxes + homeowner's insurance, sometimes called PITI) should not exceed 28% of your gross monthly income.
The 36% Back-End Ratio — Your total monthly debt payments — including housing, car loans, student loans, credit cards, and all other recurring debt — should not exceed 36% of your gross monthly income.
The calculator takes the lower of the two limits as your maximum monthly mortgage payment, then uses reverse amortization to find the loan amount and adds your down payment.
Worked Example
- Annual income: $90,000 → Monthly gross: $7,500
- Existing monthly debts: $400 (car loan + student loan minimum)
- Down payment: $60,000
- Interest rate: 6.5% | Loan term: 30 years
28% rule: $7,500 × 0.28 = $2,100 max housing payment
36% rule: $7,500 × 0.36 − $400 = $2,700 − $400 = $2,300 max mortgage
Binding limit: $2,100 (the lower of the two)
Using reverse amortization at 6.5% for 30 years:
- Maximum loan: approximately $331,000
- Maximum home price: $331,000 + $60,000 = $391,000
Debt-to-Income Ratio (DTI) Reference
| Annual Income | Max Housing (28%) | Max Total Debt (36%) | Max Home Price (6.5%, 30yr, $60K down) |
|---|---|---|---|
| $60,000 | $1,400/mo | $1,800/mo | approx. $281,000 |
| $80,000 | $1,867/mo | $2,400/mo | approx. $355,000 |
| $100,000 | $2,333/mo | $3,000/mo | approx. $427,000 |
| $120,000 | $2,800/mo | $3,600/mo | approx. $500,000 |
| $150,000 | $3,500/mo | $4,500/mo | approx. $613,000 |
Note: Assumes no existing monthly debts. Values are estimates; actual affordability depends on local property taxes, insurance, and HOA fees.
The True Cost of Homeownership
The mortgage payment is only one part of homeownership costs. Many first-time buyers underestimate the full financial picture:
Property Taxes — Vary dramatically by location, typically 0.5–2.5% of the home's value per year. A $400,000 home in a high-tax area could cost $8,000–$10,000 per year in property taxes alone.
Homeowner's Insurance — Average US cost is roughly $1,500–$2,500 per year for a $300,000–$400,000 home, though it varies significantly by region and risk factors.
HOA Fees — If applicable, these range from $100 to $1,000+ per month in high-amenity communities.
Maintenance and Repairs — A widely used rule of thumb is to budget 1% of the home's value per year for maintenance. A $400,000 home means roughly $4,000 per year for repairs, appliances, roof maintenance, HVAC servicing, etc.
Closing Costs — Typically 2–5% of the loan amount and must be paid upfront. On a $300,000 mortgage, that's $6,000–$15,000 at closing, in addition to your down payment.
Private Mortgage Insurance (PMI)
If your down payment is less than 20% of the home's purchase price, most conventional lenders will require Private Mortgage Insurance (PMI). PMI protects the lender — not you — if you default, and typically costs 0.5–1.5% of the loan amount per year.
On a $350,000 loan, PMI could add $145–$437 per month to your payment. PMI is automatically canceled once your equity reaches 20% (your loan balance drops to 80% of the original appraised value), and you can request cancellation once you believe your equity has reached that threshold.
Putting 20% down eliminates PMI entirely — one of the strongest financial reasons to save a larger down payment.
Tips to Increase Your Affordability
- Pay down existing debts — Eliminating a $400/month car payment can add $50,000–$70,000 to your maximum home price under the 36% rule
- Improve your credit score — A higher score unlocks lower interest rates, which dramatically increases buying power
- Save a larger down payment — Every extra dollar in down payment translates directly to a higher maximum home price
- Extend your loan term — A 30-year mortgage has lower monthly payments than a 15-year, increasing affordability (though you pay more interest over time)
- Shop multiple lenders — Even a 0.25% difference in interest rate can change your maximum loan amount by tens of thousands of dollars
Related Tools
- Mortgage Calculator
- Down Payment Calculator
- Debt Payoff Calculator
- Net Worth Calculator
- Savings Goal Calculator
Sources
- Consumer Financial Protection Bureau — Buying a House
- Fannie Mae — Eligibility and Underwriting Guidelines
Frequently Asked Questions
What is the 28/36 rule for buying a house?
The 28/36 rule says your monthly housing costs should not exceed 28% of your gross monthly income, and your total monthly debt payments (housing plus all other debts) should not exceed 36% of gross monthly income. Mortgage lenders use these thresholds to determine whether you qualify for a loan and how large a mortgage you can receive.
What is a good debt-to-income ratio for a mortgage?
Most conventional lenders prefer a front-end DTI (housing costs only) of 28% or less and a back-end DTI (all debts) of 36% or less. FHA loans allow back-end DTIs up to 43% with compensating factors. A DTI below 36% generally gives you access to the best rates and terms.
How much should I put down on a house?
A 20% down payment is the traditional recommendation because it eliminates PMI, reduces your monthly payment, and gives you instant equity. However, many buyers put down 3–10% with the help of low-down-payment programs. The right amount depends on your savings, local market, and how quickly you want to build equity.
Does my credit score affect how much house I can afford?
Yes, significantly. Your credit score affects the interest rate you qualify for. A borrower with an 800 credit score might get a 6.0% mortgage while someone with a 650 score pays 7.5% or more. Over 30 years on a $350,000 mortgage, that difference can amount to over $100,000 in total interest paid.