House Affordability Calculator — How Much Can You Afford?
Enter your annual income, existing monthly debts, down payment, and loan details to see exactly how much house you can afford. The calculator applies the industry-standard 28/36 rule and shows both the front-end and back-end limits so you understand which constraint applies to you.
- Maximum loan amount
- $283,983
- Monthly P&I payment
- $1,889.35
- Property tax
- $343.98
- Insurance
- $100.00
- Total monthly payment (all-in)
- $2,333.33
- 28% front-end limit
- $343,983
- 36% back-end limit
- $369,035
How it works
The 28/36 rule: how lenders decide what you can borrow
The 28/36 rule is the cornerstone of mortgage underwriting at most US lenders. The first number — 28% — is your front-end ratio: your total monthly housing payment (principal, interest, property tax, and insurance) should not exceed 28% of your gross monthly income. The second number — 36% — is your back-end ratio: your total monthly debt obligations, including the proposed mortgage and all existing debts, should not exceed 36% of gross monthly income.
These thresholds exist because decades of loan performance data show that borrowers above them default at significantly higher rates. Lenders use gross (pre-tax) income rather than take-home pay because tax liability varies by person. Note that the 28/36 rule describes what lenders will approve, not necessarily what is wise for your budget. Many financial planners recommend keeping housing costs below 25% of take-home pay to leave room for savings and emergencies.
This calculator applies both rules and shows you which one is your binding constraint. If you carry heavy existing debt (car loans, student loans, credit cards), the 36% back-end cap will often be tighter than the 28% housing cap. Reducing those debts before buying is one of the most powerful ways to increase your affordable home price.
Hidden costs of homeownership that shrink your buying power
First-time buyers frequently underestimate the gap between a mortgage P&I payment and the true monthly cost of owning a home. Property taxes in the US average 1.0–1.5% of assessed value per year but range from under 0.3% (Hawaii, Alabama) to over 2.4% (Illinois, New Jersey). On a $400,000 home at 1.2%, that is $400/month — invisible to anyone focused only on P&I.
Homeowners insurance adds another $80–$200/month depending on location, coverage, and home age. In hurricane or wildfire zones, premiums can be far higher. HOA fees range from zero for most single-family homes to $1,000+/month in high-amenity condo buildings. Maintenance and repairs average 1–2% of home value per year — budget at least $300–$500/month on a $350,000 home. All of these costs reduce the P&I payment you can safely afford and therefore lower your maximum purchase price.
Private mortgage insurance (PMI) applies whenever your down payment is below 20% of the purchase price. PMI typically costs 0.3–1.5% of the loan per year (roughly $100–$300/month on a $350,000 loan). It is not reflected in this calculator's maximum home price because the exact rate depends on your credit score and lender, but the warning flag should remind you to account for it in your monthly budget.
Practical strategies to increase what you can afford
A larger down payment improves affordability in three ways: it reduces the loan size (lower P&I), may eliminate PMI (saving $100–$300/month), and signals lower risk to lenders (potentially a better rate). Going from 5% to 20% down on a $350,000 home cuts the loan by $52,500, saves roughly $175/month in P&I at 7%, and eliminates PMI — a combined monthly benefit of $250–$350.
Reducing your existing monthly debt is the most impactful lever if the back-end (36%) rule is limiting you. Paying off a $300/month car loan increases your maximum monthly mortgage by the same $300, which at 7% for 30 years unlocks roughly $45,000 in additional buying power. The math compounds: lower DTI can also improve your credit score over time, leading to a better mortgage rate.
Interest rate sensitivity is often underestimated. At 6% vs 7.5% on a $350,000 30-year loan, the monthly P&I difference is about $325. Run this calculator at a slightly higher rate than today's to stress-test your budget against rate movements between application and closing. Choosing a 15-year term raises monthly payments but cuts total interest by 40–50% and builds equity far faster — worth modeling if your income supports it.
Frequently asked questions
›What gross income should I enter — individual or household?
If you are applying with a co-borrower (spouse or partner), enter combined gross income. Lenders underwrite joint applications on total household income and total household debt. If applying alone, use only your own income.
›Should I include my student loan payments in monthly debt?
Yes. Lenders count the required minimum payment on every student loan, even income-driven repayment amounts. If your loans are in deferment, Fannie Mae guidelines require the lender to count 1% of the outstanding balance as a monthly payment anyway.
›Why does the calculator use gross income instead of take-home pay?
The 28/36 rule was built on gross income by lenders, and that is the standard mortgage industry practice. Your take-home pay after taxes and deductions is typically 65–80% of gross income, so borrowers should privately verify that the resulting payment is also manageable against their net pay.
›What property tax rate should I use?
Look up the effective tax rate for the specific county or city you are targeting. The national US average is around 1.0–1.2% of assessed value per year. States like New Jersey and Illinois are above 2%, while Hawaii and Alabama are well under 0.5%.
›Why is my back-end limit lower than my front-end limit?
This happens when your existing monthly debts are high relative to your income. For example, if your gross monthly income is $7,000, the front-end limit is $1,960 (28%) but the back-end cap is $2,520 (36%). If you already pay $800/month in car and student loans, only $1,720 is available for housing — well below the front-end limit.
›Does this calculator account for PMI in the maximum home price?
No. PMI is flagged as a warning when your down payment is under 20%, but because the exact rate varies by lender and credit score, it is not subtracted from the maximum. To be conservative, mentally reduce the maximum monthly payment by $100–$200 before reading the home price result.
›Can I afford more than this calculator says?
Some loan programs (FHA, VA, USDA) allow higher debt ratios — FHA permits up to 31/43 and VA has no hard cap in some cases. However, borrowing at the maximum ratio leaves no buffer for job loss, medical expenses, or home repairs. Most financial advisors consider 25% of gross income a safer housing budget than the 28% lender maximum.
›Is my data sent anywhere?
No. All calculations run entirely in your browser. No income, debt, or financial data is transmitted or stored.
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