How to use the home affordability calculator
- Enter your annual household income before taxes — the figure lenders use.
- Add your monthly debt payments: car loans, student loans, minimum credit card payments, child support. Don't include rent, utilities or groceries.
- Enter your down payment, the interest rate you expect and the loan term.
- Adjust property tax, insurance and HOA fees for the area you're shopping in.
- Pick a debt-to-income limit. The conservative 28/36 rule leaves room in your budget; the stretch option shows the most a lender might approve.
How lenders decide what you can afford
Lenders look at two debt-to-income (DTI) ratios, both based on gross monthly income:
- Front-end ratio — your total housing payment (principal, interest, property tax, insurance and HOA) divided by income. The classic limit is 28%.
- Back-end ratio — housing plus all other debt payments divided by income. The classic limit is 36%; many conventional and FHA loans allow up to 43% or more with strong credit.
The calculator finds the largest monthly payment that fits both limits, then works backward to the home price that produces that payment.
Example
A household earning $100,000 a year ($8,333 a month) with $500 in monthly debts can spend up to 28% × $8,333 = $2,333 on housing, and 36% × $8,333 − $500 = $2,500 on housing under the back-end rule. The lower figure, $2,333, sets the budget. With $60,000 down, a 6.5% 30-year mortgage, 1.1% property tax and $1,500 a year for insurance, that supports a home of roughly $357,500.
The 28/36 rule and other rules of thumb
| Rule | What it says |
|---|---|
| 28/36 rule | Housing ≤ 28% of gross income; all debts ≤ 36%. |
| 3× income | A home price of about 3 times your annual income (older rule that ignores rates). |
| 30% of take-home pay | A budget-friendly target based on net, not gross, income. |
| FHA guideline | 31% housing / 43% total, with exceptions for strong applicants. |
How to afford more house
- Pay down debts before applying — when the back-end limit is what holds you back, every $100 of monthly debt you remove adds roughly $14,000 of buying power at a 6.5% rate.
- Save a bigger down payment, ideally 20% to avoid private mortgage insurance.
- Improve your credit score to qualify for a lower rate. Use the table in the results to see how much each half-point is worth.
- Shop in lower-tax areas or homes without HOA fees.
Remember the upfront costs too: closing costs usually run 2%–5% of the loan, plus moving costs and an emergency fund. Run the final numbers in our mortgage calculator.
Frequently asked questions
How much house can I afford on a $100,000 salary?
Using the 28/36 rule with $500 of other debts, a 6.5% 30-year mortgage and $60,000 down, about $357,500. The exact figure depends heavily on your interest rate, debts, down payment and local property taxes.
What is the 28/36 rule?
It is a lending guideline: spend no more than 28% of your gross monthly income on housing costs, and no more than 36% on all debt payments combined, including the mortgage.
Does the calculator include PMI?
No. If you put down less than 20%, lenders usually require private mortgage insurance, which adds roughly 0.3% to 1.5% of the loan amount per year and slightly lowers the price you can afford.
Should I buy the most expensive house I can afford?
Not necessarily. Lender limits are maximums. Many buyers aim lower so they can keep saving for retirement, handle repairs and stay comfortable if their income changes.
How do interest rates affect how much house I can afford?
A lot. On a 30-year loan, each 1 percentage point increase in the rate cuts buying power by roughly 7%–10%. Check the rate table in the results to compare.
Results are estimates for educational purposes and are not financial advice. Actual loan terms, rates, taxes and fees vary by lender and location — confirm figures with a qualified professional before making decisions.
Last updated: