Home Affordability Calculator
Wondering how much house you can actually afford? This uses the 28/36 rule lenders rely on to turn your income and debts into a realistic price range.
Include car payments, student loans and minimum credit-card payments — not utilities or groceries.
How it works
- Enter your gross annual income, total monthly debt payments and down payment.
- Add the mortgage rate and term you expect to get.
- Hit Calculate — you get your max monthly housing payment, max loan and max home price.
The 28/36 rule: lenders like your housing payment at or under 28% of gross monthly income (front-end ratio), and all monthly debts at or under 36% (back-end ratio). Your affordable payment is the lower of the two.
Worked example
With $120,000 income, $500/mo in debts, $60,000 down and a 6.5% 30-year rate: 28% of monthly income = $2,800; 36% minus debts = $3,100. Your housing budget is $2,800/mo, supporting a loan of about $443,000 — a max home price near $503,000.
The math behind it
Affordable payment = min(0.28 × monthly income, 0.36 × monthly income − monthly debts). That payment is converted to a max loan with the inverse amortization formula: Loan = Payment × ((1+r)n − 1) / (r(1+r)n). Max price = max loan + down payment.
Common mistakes
- Counting only the mortgage — taxes, insurance and HOA dues are real money too.
- Budgeting off gross income but spending like it's take-home pay.
- Ignoring maintenance — budget roughly 1% of the home's value per year.
- Assuming the maximum you're approved for is comfortable — it rarely is.
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Frequently asked questions
What is the 28/36 rule?
A lender guideline: keep housing costs at or under 28% of gross monthly income, and total monthly debt payments at or under 36%. It keeps borrowing in a range most households can sustain.
Should I buy the maximum I can afford?
Usually not. Buying at the max leaves no buffer for repairs, rate changes or life surprises. Most advisors suggest staying comfortably under your max.
Does this include property taxes and insurance?
No — this estimates principal and interest only. In reality, taxes, insurance and HOA are part of your monthly housing cost, so treat this as the upper bound.
What counts as monthly debt?
Minimum payments on credit cards, auto loans, student loans and personal loans. Day-to-day spending like groceries and utilities doesn't count.
How can I afford more house?
Bigger down payment, paying down existing debt, a better credit score (lower rate), or a longer term — each moves the number up.
Is this financial advice?
No — it's a planning estimate for informational purposes only. Speak with a licensed mortgage professional for advice about your situation.