How this affordability calculator works
Lenders look at your debt-to-income ratio (DTI): the share of your gross monthly income that goes to debt payments. This calculator finds the highest monthly housing payment allowed by two limits:
- Front-end ratio: housing costs ÷ gross monthly income (28% in the standard rule).
- Back-end ratio: (housing costs + other debts) ÷ gross monthly income (36% in the standard rule).
It uses whichever limit is lower, subtracts property tax, insurance and HOA, and then works backwards from the remaining amount to the largest loan you could take. Your down payment is added on top of that loan to get the maximum home price.
Example
With a $100,000 salary, $8,333 of gross income per month:
- 28% front-end limit: $2,333 per month for housing.
- 36% back-end limit: $3,000 minus $500 of other debts = $2,500.
- The lower limit, $2,333, sets the budget. After taxes and insurance, at 6.5% for 30 years with $50,000 down, that supports a home of roughly $345,000.
How to afford more house
- Pay down other debts first. Every $100 of monthly debt you clear can add about $15,000 of buying power.
- Save a bigger down payment to borrow less and avoid PMI.
- Raise your credit score to qualify for a lower rate.
- Compare areas with lower property taxes. Tax rates range from under 0.5% to over 2% depending on the state and county.
This is an estimate, not a loan approval. Lenders also consider your credit score, savings, employment history and loan type.
Frequently asked questions
What is the 28/36 rule?
The 28/36 rule says your housing costs (mortgage, property tax, insurance, HOA) should be no more than 28% of your gross monthly income, and all your debt payments together — housing plus car loans, student loans, credit cards — should be no more than 36%. Many lenders use these limits as a starting point.
Do lenders allow more than 36% debt-to-income?
Often, yes. Many conventional and FHA loans allow a total debt-to-income ratio of 43% or more with good credit and savings. The "Aggressive" setting uses 31/43, but stretching that far leaves less room for savings and emergencies.
Should I use gross or take-home income?
Lenders use gross (pre-tax) income, so this calculator does too. For your own budget, also check that the payment is comfortable compared with your take-home pay.
What other costs should I plan for?
Budget for closing costs (2%–5% of the loan), moving costs, furniture, maintenance (around 1% of the home's value per year) and an emergency fund. Being approved for a loan doesn't mean the full amount is comfortable.