House Affordability Calculator
Find out how much house you can afford using the 28/36 rule.
What is House Affordability?
House affordability answers the first question every buyer asks: how much house can I afford without overstretching my budget? It depends on your gross income, monthly debts, down payment, and mortgage rates. Lenders call the true monthly cost of owning PITI: principal, interest, property taxes, and homeowners insurance. This house affordability calculator works backward from the same 28/36 framework lenders use.
The 28/36 Rule Explained
The 28/36 rule is the standard mortgage-qualification guideline, expressed as two debt-to-income (DTI) ratios:
- Front-end ratio (28%): total monthly housing costs — PITI — should not exceed 28% of gross monthly income.
- Back-end ratio (36%): housing plus all other monthly debts (car loans, student loans, credit card minimums) should not exceed 36%.
Your maximum housing payment is whichever limit binds first:
Max housing payment = min(0.28 × I, 0.36 × I − D)
- I = gross monthly income (annual salary ÷ 12)
- D = total monthly debt payments excluding housing
With little debt the 28% front-end cap usually binds; with heavy debt the 36% back-end cap leaves less for housing.
How the Calculator Finds Your Maximum Price
The calculator subtracts monthly insurance and property tax (an annual percentage of the loan) from that payment, then solves the standard fixed-rate mortgage formula for the largest loan the remainder supports:
M = L × r(1 + r)n ÷ ((1 + r)n − 1)
- M = monthly principal and interest payment
- L = loan amount
- r = monthly interest rate (annual rate ÷ 12)
- n = number of monthly payments (years × 12)
Adding your down payment to the loan gives the maximum house price. At 6.5% over 30 years the payment factor is about $6.32 per $1,000 borrowed — verify any payment with our mortgage calculator.
Worked Example: $90,000 Income with $400 of Monthly Debt
Suppose you earn $90,000 a year, pay $400 a month toward other debts, plan 20% down, and expect a 6.5% 30-year loan with about $400 a month for taxes and insurance:
- Gross monthly income: $90,000 ÷ 12 = $7,500.
- Front-end cap: 0.28 × $7,500 = $2,100. Back-end cap: 0.36 × $7,500 = $2,700, minus $400 of debt = $2,300. The 28% rule binds: maximum housing payment $2,100 a month.
- Subtract taxes and insurance: $2,100 − $400 = $1,700 for principal and interest.
- Find the loan: solving the payment formula with r = 0.065 ÷ 12 and n = 360 gives L = $1,700 × ((1 + r)360 − 1) ÷ (r(1 + r)360) = $268,958. Check: $268,958 × 0.00632068 = $1,700.00 exactly.
- Add the down payment: the loan is 80% of the price, so price = $268,958 ÷ 0.80 = $336,198, with a down payment of about $67,240.
- Verify the ratios: the $2,100 payment is exactly 28.0% of income; adding the $400 of debt gives a 33.3% back-end ratio, under 36%.
The calculator models tax as a rate, not a flat amount: entering $90,000 income, $400 debts, a $67,200 down payment, 6.5%, 30 years, 1.2% tax, and $1,800 annual insurance returns $333,568.69 with the same $2,100.00 monthly total.
How Much House Can I Afford at Different Incomes?
Assumptions: 6.5% fixed rate, 30-year term, 20% down, 1.2% property tax, $1,500 annual insurance, $500 a month of other debt.
| Annual Income | Max Housing Payment | Max Loan | Max Price (20% Down) |
|---|---|---|---|
| $50,000 | $1,000 (back-end binds) | $119,524 | $149,406 |
| $75,000 | $1,750 (both rules equal) | $221,974 | $277,467 |
| $100,000 | $2,333 (front-end binds) | $301,657 | $377,071 |
| $150,000 | $3,500 (front-end binds) | $461,023 | $576,278 |
At $50,000 the existing debt makes the 36% back-end cap bind; at higher incomes the 28% front-end cap takes over. Rates matter as much as income: at 5.5% the $100,000 earner qualifies for about $413,000.
DTI Limits by Loan Type
The 28/36 rule is a conservative baseline; actual caps vary by program:
| Loan Type | Front-End DTI | Back-End DTI |
|---|---|---|
| Conventional | 28% baseline | 36% baseline; up to 45–50% via automated underwriting |
| FHA | 31% | 43%; up to 50% with compensating factors |
| VA | No cap | 41% guideline plus residual-income test |
| USDA | 29% | 41% |
PMI, Closing Costs, and the True Cost of Buying
PMI: below 20% down, conventional loans require private mortgage insurance, typically 0.5%–1.5% of the loan balance per year. Ten percent down on a $336,200 home means a $302,580 loan and roughly $126–$378 a month of PMI until you near 80% loan-to-value.
Closing costs: budget 2%–5% of the price — about $6,700–$16,800 on a $336,200 home — for lender fees, appraisal, title insurance, and prepaids, due on top of the down payment. The example purchase needs roughly $74,000–$84,000 of cash at closing — our down payment calculator can help you plan for it.
Why Lenders Approve More Than You Should Borrow
Lenders qualify you on gross income at their maximum allowed ratios — often well above 28/36. That approval is a ceiling, not a recommendation: it ignores retirement savings, childcare, maintenance (about 1% of the home's value per year), and income interruptions. Test the payment against your take-home pay — "house poor" means the mortgage fits the lender's spreadsheet, not your budget.
How to Use This Calculator
- Enter your annual gross income and monthly debt payments.
- Enter your down payment, mortgage rate, loan term, property tax rate, and annual insurance.
- Click Calculate to see your maximum price, monthly payment, and DTI ratios.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule says your monthly housing costs (principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income — the front-end ratio — and your total monthly debt payments, including housing, should stay under 36% — the back-end ratio.
How much house can I afford on a $90,000 salary?
With $400 of monthly debt, a 6.5% 30-year mortgage, and about $400 a month for taxes and insurance, the 28% rule caps your housing payment at $2,100. That supports a loan of roughly $269,000, or a home price near $336,000 with 20% down. Run your exact numbers through the calculator above.
Does this calculator include PMI?
No. If your down payment is less than 20%, expect private mortgage insurance of roughly 0.5%–1.5% of the loan balance per year (about $126–$378 per month on a $302,580 loan); add estimated PMI to your monthly costs for a conservative estimate.
Should I use gross or net income?
Lenders qualify you on gross (pre-tax) income, so use gross income here for a lender-style estimate. Also check the payment against your net (take-home) pay to ensure it fits your real budget.
What if I have no other debt?
With no monthly debt, the 28% front-end ratio is usually the binding limit. Some lenders allow a payment closer to 36% for debt-free borrowers, but staying at or below 28% leaves room for savings and surprises.
Why did my lender approve me for more than this calculator shows?
Lenders qualify you on gross income at the maximum ratios their programs allow, while this calculator applies the conservative 28/36 standard. An approval is a ceiling, not a recommendation — borrow based on your own budget, not the maximum.