House Affordability Calculator · Practical guide
How Monthly Debt Affects Home Affordability
Every $100 of monthly debt can cut your price by about $17,000 once the back-end cap binds. See the full math.
At a glance
The Short Answer
Every $100 of monthly debt cuts your maximum loan by about $13,700 — roughly $17,000 off the home price with 20% down — once the back-end cap binds at a 6.5% 30-year rate. The 28/36 rule caps total debt payments at 36% of gross income, so car, student, and credit card payments come straight out of your housing allowance.
Interactive tool
House Affordability Calculator
Enter your own values, then compare the result with the examples below.
How Debt Enters the Math
Your maximum housing payment is the smaller of two caps: min(0.28 x income, 0.36 x income - debt). With little debt the 28% front-end cap binds and extra debt costs you nothing. Once debt exceeds about 8% of gross income, the back-end cap takes over and each new dollar of debt is a dollar less for housing.
Example: $90,000 Income
Gross monthly income of $7,500, 6.5% 30-year loan, 20% down, 1.2% tax, $1,500 insurance:
| Monthly Debt | Max Housing Payment | Max Home Price |
|---|---|---|
| $0 | $2,100 | $337,200 |
| $400 | $2,100 | $337,200 |
| $800 | $1,900 | $303,100 |
| $1,200 | $1,500 | $234,800 |
At $400 the 28% cap still binds, so nothing changes. At $800 the back-end cap takes over — and by $1,200 of debt the affordable price falls by nearly a third.
Paying Down Debt Before Buying
In the example above, clearing a $400 car loan — dropping from $800 to $400 of monthly debt — restores about $34,000 of buying power because the 28% cap takes over again. If you cannot pay a loan off, lowering balances still shrinks the minimum payments lenders count. Run your own debt figure above to see both caps.
Frequently Asked Questions
Do credit cards count even if I pay them off monthly?
Lenders count the minimum payment shown on your credit report. Paying in full keeps that minimum low, which helps your ratios.
Does a student loan in deferment still count?
Usually yes. Most programs count a percentage of the balance — often 0.5-1% per month — even when no payment is due.
Which debts do lenders ignore?
Utilities, insurance, groceries, and other living expenses are not debts. Only contractual payments like loans, leases, and card minimums count.
Will a co-borrower's income offset my debt?
Their income raises the 36% allowance, but their debts count too. The combined application uses total income and total debt.