Find out how much house you can afford based on your income, monthly debts, down payment, and current interest rates. Uses the standard 28/36 rule to help you budget wisely.
Scenario: A family with a combined annual income of $95,000, $400 in monthly debts (car loan + credit cards), a $35,000 down payment saved up, and a current 6.5% interest rate on a 30-year loan. Monthly taxes and insurance are estimated at $350.
Monthly Income: $95,000 ÷ 12 = $7,917
Front-End Limit (28%): $7,917 × 0.28 = $2,217 max housing payment
Back-End Limit (36%): $7,917 × 0.36 = $2,850 total debt, so $2,850 − $400 = $2,450 max housing payment
Affordable Home Price: ~$295,000 (using the stricter front-end limit)
The family would have a comfortable DTI ratio well within the 28/36 guidelines.
Scenario: A single professional earning $150,000 annually with only $200 in monthly student loan payments. They have a $60,000 down payment and a 6.0% rate on a 30-year loan. Monthly taxes and insurance are $500.
Monthly Income: $150,000 ÷ 12 = $12,500
Front-End Limit (28%): $12,500 × 0.28 = $3,500 max housing payment
Available for P&I: $3,500 − $500 (tax/ins) = $3,000
Affordable Home Price: ~$500,000
Higher income and lower debts give more purchasing power, but high-tax areas reduce the available budget for principal and interest.
Scenario: A couple earning $120,000 combined with $700 in monthly debts (two car payments), a $50,000 down payment, and a 7.0% rate. Taxes and insurance are $450 monthly.
Standard 28/36: Front-end limit = $2,800 → affordable home ~$310,000
If they use conservative 25/33: Front-end = $2,500 → affordable home ~$270,000
If they use aggressive 30/40: Front-end = $3,000 → affordable home ~$340,000
Use the "Adjust DTI Thresholds" option to see how different budgeting approaches affect your maximum home price.
House affordability is determined by how much of your income can reasonably go toward housing costs. Lenders use the 28/36 rule as a guideline: your housing costs should not exceed 28% of your gross monthly income, and your total debt payments (including housing) should not exceed 36%.
Your monthly mortgage payment (principal, interest, taxes, insurance, and PMI) should not exceed 28% of your gross monthly income. This is called the front-end DTI ratio.
Your total monthly debt payments — including your mortgage, credit cards, auto loans, student loans, and other obligations — should not exceed 36% of your gross monthly income. This is the back-end DTI ratio.
A larger down payment reduces your loan amount and can eliminate PMI (typically required below 20% down). This increases your buying power by reducing monthly costs.
Even a 0.5% change in interest rates can significantly impact your buying power. At current rates, every 1% increase can reduce affordability by roughly 10%.
House affordability is a measure of how much home you can reasonably purchase based on your income, existing debts, available down payment, and current mortgage interest rates. It's not just about whether you can make the monthly payment — it's about whether you can do so comfortably while still meeting your other financial goals.
Lenders evaluate affordability primarily through your Debt-to-Income (DTI) ratio, which compares your monthly debt payments to your gross monthly income. The lower your DTI, the more confident lenders are that you can handle additional mortgage debt. Most conventional loans require a back-end DTI of 36% or less, though some programs allow up to 43-50% with compensating factors.
However, just because a lender approves you for a certain amount doesn't mean you should spend that much. A conservative approach (using lower DTI thresholds) ensures you have room in your budget for savings, emergencies, maintenance, and lifestyle expenses that lenders don't consider.
The 28/36 rule is a widely used guideline that lenders and financial advisors use to determine how much house you can afford. It breaks down into two key ratios:
Front-End Ratio (28%): Your total monthly housing costs — including principal, interest, taxes, insurance, and PMI — should not exceed 28% of your gross monthly income. For example, if you earn $8,000 per month, your housing payment should be at most $2,240.
Back-End Ratio (36%): Your total monthly debt payments — including housing costs plus all other debts (car loans, student loans, credit cards, etc.) — should not exceed 36% of your gross monthly income. For the same $8,000 income, your total monthly debt load should be at most $2,880.
The calculator uses the stricter of the two DTI limits to determine your maximum housing payment. If your existing debts are high, the back-end limit will likely be the binding constraint. If you have little to no debt, the front-end limit (28% of income) will be the limiting factor.
Reducing credit card balances, paying off car loans, or consolidating student loans can lower your monthly debt payments, improving your back-end DTI ratio and increasing your buying power.
A 20% down payment eliminates PMI and reduces your monthly payment. Even going from 5% to 10% down can significantly lower your monthly costs and increase the home price you can afford.
Comparing mortgage rates from multiple lenders can save you thousands. A 0.5% lower rate on a $300,000 loan saves about $90 per month, which translates to roughly $15,000 more in buying power.
A higher income directly increases your DTI limits. Even a modest raise or a side hustle that adds $500/month in income can increase your affordable home price by tens of thousands of dollars.
⚠️ Important Disclaimer: This House Affordability Calculator is for educational and informational purposes only. It provides estimates based on the standard 28/36 DTI rule and current mortgage math. Actual loan approval depends on many factors not considered here, including credit score, employment history, asset reserves, and lender-specific guidelines. Always consult with a qualified mortgage professional before making home buying decisions. This calculator does not provide financial advice.