House Affordability Calculator

How lenders decide what you can afford

Most US lenders start with your debt-to-income ratio (DTI): the share of your gross (pre-tax) monthly income that goes to debt payments. A long-standing guideline is the 28/36 rule. Your total housing payment (principal, interest, property tax, insurance, HOA dues and mortgage insurance) should stay at or below about 28% of gross monthly income, and all your debt payments together, including car loans, student loans and credit-card minimums, at or below about 36%. The lower of the two limits sets your budget.

This calculator turns that budget into a home price. It searches for the highest price whose full monthly payment still fits, taking into account that property tax grows with the price and that private mortgage insurance (PMI) is usually charged while the loan is more than 80% of the home's value.

Gross monthly income = annual income ÷ 12
Housing budget = min(28% × monthly income, 36% × monthly income − other debts)
Monthly payment(price) = (price − down) × r ÷ (1 − (1 + r)^−n) + price × tax% ÷ 12 + insurance ÷ 12 + HOA + PMI
Affordable price = highest price where monthly payment ≤ housing budget

Worked example

A household earns $100,000 a year and pays $500 a month on other debts. They have $60,000 for a down payment, the mortgage rate is 6.5% for 30 years, property tax is 1.1% of the price per year, insurance is $1,800 a year and PMI is 0.5% of the loan per year.

• Gross monthly income: $100,000 ÷ 12 = $8,333.33.
• 28% housing limit: $2,333.33. 36% total limit minus debts: $3,000 − $500 = $2,500. The housing limit is lower, so it sets the budget.
• The highest price that fits is about $338,067, a loan of $278,067 (17.7% down).
• Monthly payment: principal and interest $1,757.57, property tax $309.89, insurance $150.00 and PMI $115.86, a total of $2,333.33.
• The back-end ratio is ($2,333.33 + $500) ÷ $8,333.33 = 34%, inside the 36% limit.

How debts and the down payment change the answer

With the same income but only $20,000 down, the affordable price falls to about $302,858. The monthly budget is the same, but more of it goes to interest and PMI on a bigger loan. If that buyer also pays $1,500 a month on a car loan and student loans, the 36% total-debt limit takes over: only $3,000 − $1,500 = $1,500 is left for housing, and the affordable price drops to about $193,982. Paying off a car loan before applying can raise your budget more than months of extra saving.

What the 28/36 rule does not tell you

• Lenders can approve more. Many conventional loans allow a total DTI up to about 45–50% with strong credit and reserves, and FHA loans also allow higher ratios. Approval is not the same as comfort.
• It uses gross income. Taxes, retirement contributions and childcare come out of the same paycheck, so check the payment against your take-home budget too.
• Cash at closing is separate. Besides the down payment you need closing costs, often 2–5% of the price, plus moving costs and a cushion for repairs.
• Rates move. One percentage point on the rate changes the affordable price by roughly 10%. Run the numbers with the rate you are actually quoted.

Tips for a realistic budget

• Use the property tax rate for the county you are buying in; it ranges from well under 1% to over 2% of value across the US.
• Ask an insurance agent for a quote early, especially in areas with hurricane, wildfire or flood risk, where premiums can be several times the national average.
• Include HOA dues for condos and planned communities; they count toward your housing payment.
• Try a lower housing limit such as 25% to see a more comfortable price, especially if you have other savings goals.

Common mistakes

• Using take-home pay in the 28/36 formula. The guideline is based on gross income; using net income gives a much lower, more cautious number.
• Leaving out minimum card payments. Lenders count every monthly debt that appears on your credit report.
• Spending the whole down payment. Lenders often want reserves left after closing, and an empty savings account makes the first repair stressful.

Estimates only. A lender's pre-approval, based on your credit report and documents, is the figure to rely on.

Frequently asked questions

Sources

• Consumer Financial Protection Bureau (consumerfinance.gov). What is a debt-to-income ratio?
• Fannie Mae Selling Guide, B3-6-02: Debt-to-Income Ratios.
• Consumer Financial Protection Bureau. Owning a Home: closing costs and loan estimates.

Last reviewed 27 October 2026. Results are estimates; see our disclaimer.