Lenders do not start with the house; they start with your income. Two debt-to-income (DTI) ratios cap how large a monthly housing payment they will accept, and that payment — after property tax, insurance and mortgage insurance take their share — determines the price you can borrow toward. This calculator runs that logic in reverse to find the most expensive home your income supports and shows which limit is holding you back.
How to use the house affordability calculator
- Enter your gross annual income and your current monthly debt payments.
- Enter the down payment you can put toward the price.
- Enter the mortgage rate, term, property tax rate, yearly insurance, monthly HOA dues and a PMI rate for down payments under 20%.
- Keep the default 28% / 36% ratios or enter the limits your lender uses.
- Read the maximum price, the monthly payment breakdown and the comparison tables.
How affordability is calculated
The housing budget is the smaller of the two DTI limits:
The calculator then finds the highest price whose full housing payment fits that budget:
Principal and interest use the standard mortgage payment formula. PMI is charged on the loan amount only when the loan exceeds 80% of the price.
Worked example
A household earning $100,000 a year with $500 of monthly debts and $60,000 to put down, borrowing at 6.5% for 30 years:
Monthly income: $8,333.33. Front-end limit: 28% = $2,333.33. Back-end limit: 36% − $500 = $2,500.00.
The housing ratio binds, so the budget is $2,333.33 a month.
At a price of $341,300: P&I on $281,300 = $1,778.01, tax $312.86, insurance $125.00, PMI $117.21 — total $2,333.07.
The down payment is about 17.6% of the price, which is why PMI applies. If the same household had $1,500 of monthly debts, the back-end ratio would bind instead and the price would fall to about $242,300.
How the rules and the rate change the answer
| DTI limits | Max price | Housing payment |
|---|---|---|
| 25% / 33% (conservative) | $308,600 | $2,082.79 |
| 28% / 36% (traditional) | $341,300 | $2,333.07 |
| 31% / 43% (FHA benchmark) | $373,900 | $2,582.59 |
| 45% back-end only | $461,000 | $3,249.26 |
Rates matter almost as much: at 5.5% the same budget reaches $367,100, while at 7.5% it buys $318,600.
Assumptions and what to add yourself
What this estimate assumes
A fixed-rate loan, property tax as a percentage of the purchase price, a steady insurance premium and PMI that applies until you reach 20% equity. Lenders also weigh credit score, employment history and cash reserves, which the ratios do not capture.
Costs lenders do not count
Maintenance (often budgeted at 1–2% of the home’s value a year), utilities, commuting and furnishing a larger home all come out of the same paycheck. If the maximum price would leave no room for savings, aim lower.
Next steps
Plug the price into the mortgage calculator for a full amortization schedule, or use the loan affordability calculator for non-housing debt.
Estimates only, not a loan approval. Lenders set their own limits, and taxes and insurance vary widely by location.
Frequently asked questions
What is the 28/36 rule?
It is a long-standing lending guideline: your total housing payment (principal, interest, taxes, insurance, PMI and HOA dues) should be no more than 28% of gross monthly income, and all monthly debt payments including housing no more than 36%. The lower of the two limits sets your budget.
Which debts count in the back-end ratio?
Recurring obligations that appear on a credit report or court order: car loans, student loans, minimum credit card payments, personal loans, child support and alimony. Rent you will stop paying, utilities, phone bills and groceries are not counted.
Can I qualify for more than the 28/36 rule allows?
Often, yes. FHA guidelines use 31% and 43% as standard benchmarks, and many conventional loans are approved with total debt ratios in the mid-40s with strong credit or reserves. Being approved for a larger loan does not mean the payment will feel comfortable, so compare the scenarios in the table.
Should I use gross or take-home pay?
Lenders use gross income, before taxes and deductions, so the calculator does too. For your own budgeting, it is wise to check that the housing payment also fits your take-home pay alongside savings, childcare and other costs lenders ignore.
Does the down payment include closing costs?
No. Enter only the cash going toward the price. Closing costs commonly run 2–5% of the purchase price, and lenders may also want a few months of payments in reserve, so keep extra cash aside for both.