Find out how much house you can afford based on your income, monthly debts, down payment and today's interest rates, using the 28/36 rule lenders commonly use.
How the affordability calculator works
Most lenders look at two ratios when deciding how large a mortgage to offer. This calculator uses both and gives you the lower, safer result.
- Front-end ratio (28%): your total housing payment (principal, interest, property tax and insurance) should be no more than about 28% of your gross monthly income.
- Back-end ratio (36%): your housing payment plus all other monthly debt payments should be no more than about 36% of gross income.
The calculator works out the maximum monthly housing payment allowed by both limits, then finds the home price whose payment fits inside it, using your down payment, rate, term, property tax rate and insurance.
The 28/36 rule as a formula
Max housing payment = lower of (income × 28%) and (income × 36% − other debts)
Both percentages are editable, because some loan programs allow higher ratios. FHA loans, for example, often allow a back-end ratio above 40%. Higher limits mean a bigger loan, but also a tighter monthly budget.
Worked example
Sam and Jo earn $90,000 a year together ($7,500 a month) and pay $500 a month toward a car loan. They have $40,000 for a down payment. Rates are 6.5% on a 30-year loan, property tax is 1.1% a year and insurance is $1,500 a year.
- Front-end limit: 28% × $7,500 = $2,100
- Back-end limit: 36% × $7,500 − $500 = $2,200
The lower limit is $2,100 a month. A home price of about $307,800 fits that budget: a $267,800 loan costs $1,692.83 in principal and interest, plus $282.17 in property tax and $125 in insurance.
What lenders look at besides income
- Credit score: a higher score usually means a lower rate, which raises the price you can afford.
- Cash reserves: lenders like to see a few months of payments in savings after closing.
- Employment history: two years of steady income is the usual benchmark.
- Debt-to-income ratio: check yours with the debt-to-income calculator.
Affording it versus being comfortable
The maximum a lender will approve is not always a comfortable payment. Leave room for maintenance (often 1% of the home's value each year), savings and the rest of life. Many buyers aim below the maximum on purpose. Run a second scenario with a 25% front-end limit to see a more relaxed budget.
Frequently asked questions
Should I use gross or take-home pay?
Lenders use gross (pre-tax) income, so the calculator does too. For your own budget, compare the payment with your take-home pay as well.
Does a bigger down payment help?
Yes. Every extra dollar down raises the price you can afford by a dollar without increasing the payment, and reaching 20% avoids PMI. See the down payment calculator.
Why is the result lower than my pre-approval?
Some lenders allow higher ratios than 28/36. A pre-approval tells you what a lender will lend; this calculator shows what fits a traditional, conservative budget.
Related tools
Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.