House Affordability
The home price you can afford using the 28/36 lending rule.
Home price you can afford
$372,242.72
$2,100.00/mo payment
Max mortgage
$332,242.72
Monthly budget
$2,100.00
Down payment
$40,000.00
AI Breakdown & Smart Takeaway
Plain-English insight on your numbers
Get a personalized explanation of what these results mean — and how to improve them.
How the House Affordability works
The House Affordability Calculator helps you determine the maximum home price you can realistically afford based on your gross income, monthly debts, down payment, and prevailing interest rates — all anchored to the widely accepted 28/36 lending rule. It's designed for first-time buyers and seasoned homeowners alike who want a data-driven starting point before talking to a lender.
At the core of this calculator is the 28/36 rule, a guideline used by most conventional lenders to evaluate mortgage applications. The '28' means your total monthly housing costs — principal, interest, property taxes, and homeowner's insurance (collectively called PITI) — should not exceed 28% of your gross monthly income. The '36' means your total monthly debt obligations, including your housing payment plus car loans, student loans, credit cards, and other recurring debts, should not exceed 36% of gross monthly income. The calculator applies both limits and uses the more restrictive of the two results to determine your safe borrowing ceiling.
To arrive at a home price, the calculator works backward from your allowable monthly payment. It first computes your maximum housing payment under the 28% front-end limit, then computes your maximum housing payment under the 36% back-end limit by subtracting your existing monthly debts from 36% of gross income. Whichever figure is lower becomes the effective monthly payment budget. From there, a standard mortgage amortization formula translates that payment into a loan amount given your interest rate and loan term, and the calculator adds your down payment to produce the final affordable home price.
Several variables have an outsized effect on your result. Interest rates are the most powerful lever — a one-percentage-point increase in your mortgage rate can reduce your affordable price by tens of thousands of dollars. Your existing debt load matters equally: carrying $500/month in car and student loan payments removes roughly $500 from your back-end budget before a single dollar goes toward housing. Down payment size affects both the loan amount you need and whether you'll owe private mortgage insurance (PMI), which typically adds 0.5%–1.5% of the loan annually and is folded into the monthly payment estimate. Property tax rates, which vary dramatically by state and county, also factor in because they are part of the PITI housing cost.
A common mistake buyers make is confusing pre-qualification with true affordability. A lender may approve you for the absolute maximum the 28/36 rule allows, but that figure leaves no margin for savings, emergencies, or lifestyle expenses. Financial planners often recommend targeting a housing cost closer to 25% of gross income rather than the full 28% ceiling. Another frequent error is using net (take-home) pay instead of gross (pre-tax) income — the 28/36 rule is always applied to gross monthly income, so inputting your net pay will artificially underestimate your borrowing capacity.
Formula
28% of gross monthly income for housing, 36% for total debt
Pro tips
- Run the calculator twice — once with your actual interest rate and once with a rate 1.5% higher — to stress-test your affordability against future rate environments or refinancing scenarios.
- Pay down high-balance revolving debt before applying for a mortgage; reducing your monthly debt obligations by even $200/month can increase your affordable home price by $30,000–$40,000 at typical interest rates.
- If your result is lower than expected, experiment with down payment amounts. Crossing the 20% threshold eliminates PMI, which can meaningfully increase the loan amount the same monthly budget supports.
- Use your gross household income, not just one partner's salary, if both applicants will be on the mortgage — lenders combine qualifying income for joint applications.
- Target a front-end ratio of 25% rather than the maximum 28% to maintain a financial buffer for maintenance costs, which typically run 1%–2% of a home's value per year.
Key terms
- 28/36 Rule
- — A conventional lending guideline stating that housing costs should not exceed 28% of gross monthly income and total debt payments should not exceed 36% of gross monthly income.
- Front-End Ratio
- — The percentage of gross monthly income consumed by housing costs (PITI), capped at 28% under standard lending guidelines.
- Back-End Ratio
- — The percentage of gross monthly income consumed by all recurring monthly debts including housing, capped at 36% under the standard lending rule.
- PITI
- — An acronym for Principal, Interest, Taxes, and Insurance — the four components that make up a total monthly mortgage payment.
- Private Mortgage Insurance (PMI)
- — A monthly insurance premium required by lenders when a borrower's down payment is less than 20% of the home's purchase price, protecting the lender against default.
- Debt-to-Income Ratio (DTI)
- — The ratio of your total monthly debt obligations to your gross monthly income, used by lenders to assess your capacity to take on additional debt.
