House Affordability Calculator
Find out how much home you can realistically afford based on your income, existing debts, down payment, and current interest rates. This calculator uses the standard 28% front-end and 36% back-end lending ratios to estimate your maximum home price.
This calculator provides estimates for general informational purposes only and does not constitute financial advice. Consult a qualified financial professional before making any financial decisions.
How It Works
Lenders use two primary ratios to determine how much house you can afford:
Front-end ratio (28% rule): Your monthly housing payment (P&I + taxes + insurance) should not exceed 28% of gross monthly income.
Max housing payment = Gross monthly income × 0.28
Back-end ratio (36% rule): All monthly debt payments (housing + existing debts) should not exceed 36% of gross monthly income.
Max housing payment from back-end = (Gross monthly income × 0.36) − Existing monthly debts
The binding constraint is whichever gives the lower housing payment.
Converting max payment to max home price uses the reverse of the EMI formula:
Max loan = Max P&I payment × ((1+r)^n − 1) / (r × (1+r)^n)
Max home price = Max loan + Down payment
Worked example: $80,000/yr income ($6,667/mo), $500/mo existing debts, $40,000 down, 7% rate, 30-year term.
Front-end max payment = $6,667 × 0.28 = $1,867/mo
Back-end max payment = ($6,667 × 0.36) − $500 = $2,400 − $500 = $1,900/mo
Binding constraint: $1,867/mo (front-end)
Monthly rate r = 7/12/100 = 0.005833, n = 360
Max loan = $1,867 × ((1.005833)^360 − 1) / (0.005833 × (1.005833)^360) ≈ $279,700
Max home price = $279,700 + $40,000 = $319,700
Frequently Asked Questions
What are the 28/36 rules?
These are traditional lending guidelines. The 28% rule says your housing payment should not exceed 28% of gross monthly income. The 36% rule says total debt payments should not exceed 36%. Lenders also use 31/43 for FHA loans and some use 28/45 for conventional loans with strong credit.
Should I buy at the maximum I can afford?
Not necessarily. Buying at the top of your budget leaves no room for unexpected expenses, job changes, or rate increases (for adjustable-rate mortgages). Many financial advisors recommend targeting a home priced at 2.5–3× your annual income as a conservative benchmark.
How does the down payment affect affordability?
A larger down payment reduces the loan amount directly. It also eliminates PMI (if you reach 20%), which typically adds 0.5–1.5% of the loan amount annually. Together, these effects can meaningfully increase how much house the same monthly budget can buy.
Does this include property tax and insurance?
The front-end ratio limit applies to PITI (principal, interest, taxes, insurance). This calculator estimates the maximum P&I payment only. If you know your estimated property tax and insurance, subtract them from the max monthly payment to find the true max P&I for the loan calculation.
What if my debt-to-income is too high to buy the home I want?
Options include: save a larger down payment to reduce the loan amount, pay down existing debts to improve back-end DTI, increase income, consider a longer loan term to reduce the monthly payment, or choose a less expensive home.