House Affordability Calculator
How much house you can afford by income.
Details
Home you can afford
$372,243
With $40,000 down
Loan amount
$332,243
Monthly P&I
$2,100.00
Taxes + insurance
$0.00
Total monthly payment
$2,100.00
This works out a realistic home price from your income, existing debts, down payment and current rates.
It applies the standard lender ratios and shows which of them is actually limiting you.
How much house you can afford
Affordability is decided by two ratios lenders apply, usually called the 28/36 rule. No more than 28% of gross monthly income on housing, and no more than 36% on all debt payments combined.
On $100,000 of income that is $2,333 for housing and $3,000 for everything. If you already pay $500 a month on a car and student loans, the second test binds first and your housing budget is $2,500, not $2,333.
The number that matters more is the one no lender gives you. Approval is a maximum, not a recommendation. Lenders see gross income and reported debts; they do not see childcare, health costs, how much you save, or how secure your job is.
The lower of the two is your limit. Existing debt reduces the housing budget dollar for dollar through the back-end test.
What to enter
- Gross annual income
- Before tax. Lenders work from gross, which is part of why approvals feel larger than they should.
- Existing monthly debt
- Car payments, student loans, credit card minimums, child support. Not utilities, groceries or insurance you pay separately.
- Down payment
- Reduces the loan and can remove PMI at 20%. It also has to leave you with cash for closing costs.
- Interest rate
- Moves affordability sharply. A one-point rate change alters your purchasing power by roughly 10%.
- Property tax and insurance
- Part of the housing payment lenders count, and they vary enormously by state.
What the housing payment includes
- Principal and interest
- The loan repayment itself. Usually the largest part, but never the whole payment.
- [Property tax](/real-estate/property-tax-calculator)
- Collected monthly through escrow. Can be several hundred dollars a month, and much more in high-tax states.
- Homeowners insurance
- Also escrowed. Rising sharply in some regions, and worth quoting before you commit to an area.
- [PMI](/real-estate/pmi-calculator)
- Required below 20% down on a conventional loan. Removable later, unlike FHA insurance in most cases.
- HOA fees
- Counted by lenders and easy to forget. On a condo they can rival the property tax.
What this assumes
The 28/36 ratios are conventional guidance. Many loan programmes allow higher, particularly with strong credit or reserves.
Maintenance is not in any of these ratios. Budget roughly 1% of the home's value a year, and more for an older property.
How to calculate what you can afford to spend on a home
Apply both ratios, take the lower answer, then work backwards from the payment to a price.
- front-end
- The housing payment on its own
- back-end
- All debt including housing, so existing debt reduces it directly
Work out both limits. 28% of gross monthly income, and 36% minus your existing debt payments. Take the lower.
Subtract tax, insurance, PMI and HOA. What remains is the principal and interest your budget supports, which is usually well under the total.
Convert that into a loan amount. Work the mortgage payment formula backwards at current rates and your intended term.
Add the down payment. Loan plus down payment is the price. Then check it against a budget built on take-home pay, not gross.
See a worked example: which test actually binds
- Income
- $100,000 gross, so $8,333 a month
- Existing debt
- $500 a month
Front-end at 28%: $8,333 × 0.28 = $2,333 for housing.
Back-end at 36%: $8,333 × 0.36 = $3,000, less $500 of existing debt, leaves $2,500.
The lower figure governs, so $2,333 is the limit here.
Clearing that $500 car payment would not raise the limit, because the front-end test is already the binding one. Worth knowing before paying off a loan expecting more buying power.
$2,333 a month for housing
Frequently asked questions
- What is the 28/36 rule?
No more than 28% of gross monthly income on the housing payment, and no more than 36% on all debt payments including housing.
The housing figure includes principal, interest, property tax, insurance, PMI and HOA fees, not just the loan repayment.
- Why is my pre-approval larger than I expected?
Because lenders assess gross income and reported debts, and nothing else. They cannot see childcare, health costs, how much you save, or how secure your income is.
Treat the approval as a ceiling rather than a target. Many buyers deliberately shop 20-25% below it, which is where the room for savings and unexpected costs comes from.
- How much do interest rates change what I can afford?
A great deal. A one percentage point move alters purchasing power by roughly 10% at the same monthly payment.
That is often larger than the effect of saving another year for a bigger deposit, which is why waiting for a lower price in a rising-rate market can leave you worse off.
- Does paying off a car loan help me qualify?
Only if the back-end ratio is what is limiting you. Clearing a $500 payment raises the back-end allowance by $500.
If the 28% front-end test is already binding, as in the example above, clearing the car loan changes nothing. Work out which test binds before deciding.
- What costs do these ratios leave out?
Maintenance and repairs, which run roughly 1% of the home's value a year and more on an older property. Also utilities, which are usually higher than in a rental.
On a $400,000 home that is around $4,000 a year, or $333 a month, that no lender ratio accounts for.
- How much should I put down?
20% avoids PMI, which is the usual target. But low-down-payment programmes exist and are sometimes the better choice.
Do not drain your savings to reach 20%. Buying with 10% down and keeping an emergency fund is generally safer than buying with 20% and nothing left.
Problems people actually run into
Buying at the top of the approval
The approval is calculated on gross income with no view of your actual life. Buying at the maximum leaves nothing for saving, maintenance or a change in circumstances.
Check the payment against your take-home pay in a budget. If it does not leave room to save, it is unaffordable regardless of what the letter says.
Forgetting everything beyond principal and interest
A $2,000 principal-and-interest payment is not a $2,000 housing cost. Property tax, insurance, PMI and HOA can add $500 to $800 a month.
Maintenance adds more again and never appears on any lender's form. Budget the full picture before deciding what you can afford.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026
