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How Much House Can I Afford?

Find the home price your income actually supports, using the debt-to-income limits lenders apply - and see which limit is binding.

Home Affordability Calculator

Car loans, student loans, credit card minimums

Per year, of home value

Lender DTI limits

The 28/36 rule is the conventional standard. Some programs allow more.

Home price you can afford

$422,011

Borrowing $362,011 with $60,000 down · $2,800 a month
Per month$2,800
  • Principal & interest$2,28882%
  • Property tax$38714%
  • Insurance$1254%
Monthly housing payment breakdown

Max loan

$362,011

Monthly payment

$2,800

Down payment

14.2%

PMI likely

Limited by

Housing ratio

Front-end DTI

The 28% housing ratio is your binding limit - your other debts are not restricting you yet.

How the limit was calculated

  • Gross monthly income$10,000
  • Housing limit at 28%$2,800
  • Total debt limit at 36%, less debts$3,100
  • Housing budget (the lower of the two)$2,800

A more conservative target of 25% of take-home pay would put the payment nearer $1,875 a month. Lenders approve the maximum they consider collectable, which is not the same as the amount that leaves you comfortable.

How the home affordability calculation works

Lenders do not decide what you can afford by looking at your salary. They look at two ratios, and the smaller of the two sets your limit. Understanding which one binds you tells you what to fix.

The standard is the 28/36 rule:

  • Front-end ratio (28%): your total monthly housing payment — principal, interest, property tax, insurance, and HOA — should not exceed 28% of gross monthly income.
  • Back-end ratio (36%): your housing payment plus all other monthly debt — car loans, student loans, credit card minimums — should not exceed 36% of gross monthly income.

Work a real case. A household earning $120,000 a year has $10,000 gross per month.

  • Front-end limit: 28% × $10,000 = $2,800 for housing.
  • Back-end limit: 36% × $10,000 = $3,600, minus $500 of existing car and student loan payments = $3,100 available for housing.

The lower figure wins, so $2,800 is the housing budget. Here the front-end ratio binds. If that same household carried $1,200 in other debt instead of $500, the back-end limit would drop to $2,400 and debt would become the constraint — meaning paying down the car loan, not earning more, would raise the budget.

From a $2,800 budget you work backwards. Subtract insurance (about $125/month) and HOA, leaving roughly $2,675 for principal, interest, and property tax. At 6.5% over 30 years with a $60,000 down payment and a 1.1% property tax rate, that supports a home price of about $460,000.

Three things the ratios do not capture:

  • The ratios use gross income, but you spend net. A $2,800 payment against $10,000 gross is closer to 37% of actual take-home pay. Many buyers are more comfortable targeting 25% of net income.
  • Closing costs are separate from the down payment. Budget an additional 2-5% of the purchase price, which is $9,000-$23,000 on a $460,000 home.
  • Maintenance is real and recurring. Roughly 1% of the home's value per year is a standard reserve — about $4,600 annually on that house, before any single repair.

The maximum a lender will approve is not a recommendation. It is the edge of what they consider collectable.

Disclaimer: This calculator provides estimates for informational purposes only and is not financial advice. Your actual rate, taxes, fees, and payment will vary - confirm figures with a licensed lender or financial professional.

Frequently asked questions

What is the 28/36 rule?

It is the debt-to-income standard most conventional lenders use. Your housing payment should stay under 28% of gross monthly income, and your total monthly debt including housing should stay under 36%. Whichever produces the smaller housing budget is the one that applies.

Does the calculator use gross or net income?

Gross income, before taxes and deductions, because that is what lenders underwrite against. Bear in mind that a payment at 28% of gross can be closer to 37% of take-home pay, which is why many buyers deliberately target a lower price than the maximum.

How does existing debt reduce what I can borrow?

Every dollar of monthly debt payment comes directly out of your back-end limit. On a $10,000 monthly income, $500 of car and student loan payments cuts your available housing budget from $3,600 to $3,100. Paying off a car loan before applying can raise your budget more than a raise would.

How much do I need for a down payment?

Twenty percent avoids PMI, but conventional loans go as low as 3%, FHA loans 3.5%, and VA and USDA loans can require nothing down. A smaller down payment raises your loan, your monthly payment, and usually adds mortgage insurance - all of which lower the price you qualify for.

What costs does this leave out?

Closing costs of roughly 2% to 5% of the price, moving costs, and ongoing maintenance of about 1% of home value per year. Utilities are typically higher than in a rental too. These do not affect what a lender approves, but they very much affect what you can comfortably carry.

Should I borrow the maximum I qualify for?

Usually not. The approved maximum is the edge of what the lender considers safe for them, and it assumes your income and expenses stay as they are today. Leaving room for emergencies, rate changes on future moves, and life changes is what keeps a mortgage comfortable rather than tight.

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