Home Affordability Calculator

About this calculator

A free home affordability calculator built on the 28/36 rule lenders have used for decades: housing costs at or under 28% of gross monthly income, all debt payments at or under 36%. It takes the binding cap, funds principal, interest, property tax, and insurance from it, and solves the purchase price in closed form. A $120,000 income with $500 of existing monthly debts, $60,000 saved, and a 6.5% 30-year rate supports a $2,800 monthly housing budget and roughly a $418,557 home. The result is a budgeting estimate under a disclosed convention — not a pre-approval, a lending decision, or financial advice. Real underwriting weighs credit, reserves, and loan programs this page can't see.

How the 28/36 rule turns income into a price

The rule sets two ceilings. Front-end: housing costs — payment, tax, insurance — at no more than 28% of gross monthly income ($2,800 on $10,000 a month). Back-end: housing plus every other debt payment at no more than 36% ($3,600, less the $500 of existing debts = $3,100 available). The calculator takes the lower ceiling — $2,800 here, so the front-end binds — and reports which one bound, because the fix differs: a front-end bind responds to rates and taxes, a back-end bind responds to paying off debts.

From that budget it works backwards: $150 of insurance comes off the top, then the remainder splits between the mortgage payment and property tax (which itself scales with the price), and the loan solves in closed form from the annuity factor. The example lands at a $358,557 loan plus the $60,000 down payment — $418,557 of house, with a $2,266.32 principal-and-interest payment and $383.68 of monthly tax.

What moves the number most

Income sets the ceiling linearly, but the interest rate works the loan harder than people expect: the same $2,800 budget funds a much larger loan at 5.5% than at 7.5%, because the annuity factor compounds over 360 payments. Existing debts only matter once they push the back-end below the front-end — the example household could carry up to $800 of monthly debts before its binding cap started shrinking.

The down payment adds to the price almost dollar-for-dollar (slightly less, because a pricier home carries more property tax). At a $90,000 income with $30,000 down and $400 of debts, the model supports about a $298,399 home on a $2,100 budget — useful for seeing how a second year of saving translates into purchase price.

28/36 is a convention, not a law

Lenders routinely approve above these ratios — FHA guidelines run higher, and qualified-mortgage rules cap total DTI at 43% in many cases. The calculator defaults to 28/36 because it's the conservative benchmark that leaves room for the costs underwriting ignores: utilities, childcare, maintenance, retirement savings. Approval at 43% DTI is not the same as comfort at 43% DTI.

The adjustable-caps view lets you model other conventions — set 31/43 to approximate FHA, or drop to 25/33 for a deliberately conservative budget — and watch the affordable price move with the assumption.

From estimate to pre-approval

This page solves collateral-free arithmetic; a lender adds credit score, employment history, reserves, and program rules (conventional, FHA, VA) before quoting a real number, and an appraisal disciplines the price itself. Use the calculator to set your search band and stress-test it at a higher rate, then treat a written pre-approval — not this estimate — as the number you shop with.

By variant

• Max Price by Income
• The 28/36 Rule

Questions

How much house can I afford on $120,000 a year?

With $500 of monthly debts, $60,000 down, and a 6.5% 30-year rate, about $418,557 under the 28/36 rule — a $2,800 monthly housing budget covering a $2,266.32 payment plus tax and insurance.

What is the 28/36 rule?

A lending convention: housing costs at or under 28% of gross monthly income, and all debt payments combined at or under 36%. The calculator applies whichever cap is tighter for your inputs.

Do my student loans and car payment reduce what I can afford?

Only when they push the back-end cap below the front-end one. On a $120,000 income the first $800 of monthly debts doesn't change the result; beyond that, every debt dollar comes out of the housing budget.

Why is my lender's pre-approval different from this number?

Lenders use different ratio caps by program, price in your credit and reserves, and quote real rates. This page is the conservative 28/36 arithmetic — a search-band estimate, not an underwriting decision.

Does the calculator include property tax and insurance?

Yes — both come out of the housing budget before the loan is sized. Tax defaults to 1.1% of the home's value per year and scales with the solved price; insurance is the flat monthly amount you enter.