House Affordability Calculator
How much house you can afford depends less on the sticker price and more on whether the monthly payment fits your income and existing debts. This calculator applies the lender 28/36 rule, reserves room for property tax and insurance, and then searches for the largest loan whose total monthly housing cost stays within your budget. Adding your down payment gives the maximum home price you can realistically target.
Formula
Budget = min(income/12 × 0.28, income/12 × 0.36 − debts); max price = max loan + down payment
- income
- Gross annual income
- debts
- Existing recurring monthly debt payments
- 0.28 / 0.36
- Front-end and back-end debt-to-income ratio limits
- down payment
- Cash you contribute upfront, added to the loan for the price
How it works
- Enter your annual income, recurring monthly debts, planned down payment, interest rate, term, annual property tax rate, and yearly insurance.
- The tool sets a housing budget as the lower of 28 percent of monthly income (front-end) and 36 percent minus your debts (back-end), the classic qualifying ratios.
- It then binary-searches for the largest loan whose principal, interest, monthly property tax, and insurance fit that budget, and adds your down payment to report the maximum home price.
Worked example
$120,000 income, $500 monthly debts, $50,000 down, 6.5% rate, 30-year term, 1.2% property tax, $1,500/yr insurance.
- Monthly income: 120,000 ÷ 12 = $10,000; front-end 28% = $2,800; back-end 36% − 500 = $3,100.
- Housing budget is the lower figure: $2,800 per month for principal, interest, tax, and insurance.
- Solve for the largest loan whose P&I plus monthly tax ($408,573 × 1.2% ÷ 12) plus $125 insurance fits $2,800.
- That loan is about $358,573 with a P&I payment near $2,266.43; add the $50,000 down payment.
Maximum home price about $408,573 with a loan of $358,573 and an estimated principal-and-interest payment of $2,266.43 per month.
Frequently asked questions
- What is the 28/36 rule?
- It is a common lender guideline: spend no more than 28 percent of gross monthly income on housing (front-end ratio) and no more than 36 percent on total debt including housing (back-end ratio). This calculator uses the stricter of the two as your budget.
- Why do my other debts reduce what I can afford?
- The back-end ratio counts car loans, student loans, and credit card minimums toward your 36 percent debt limit. The more of that limit those debts consume, the less is left for a mortgage payment, lowering your affordable price.
- Does a bigger down payment let me buy a more expensive home?
- Yes. Your down payment is added directly to the maximum loan to get the maximum price, and it does not consume your monthly budget, so a larger down payment raises the home price you can target dollar for dollar.
- Are taxes and insurance included?
- Yes. The estimate reserves room within your monthly budget for property tax (as a percentage of price) and annual insurance before solving for the loan, so the affordable price reflects the full housing payment.