How much house can I afford?
Enter your gross income, monthly debt payments and down payment to estimate a comfortable home price and the maximum monthly housing payment.
Uses the 28/36 rule; principal and interest only — taxes, insurance and HOA are extra.
How this calculator works
Lenders do not start from the home price; they start from your income and debts. The conventional guideline is the 28/36 rule: the housing payment (principal, interest, taxes and insurance) should stay at or below 28% of gross monthly income, and total debt payments — housing plus cards, cars and student loans — should stay at or below 36%. Many lenders now stretch the back-end ratio to 43% or more, but the lower figure is the safer planning number.
This calculator takes the smaller of the two limits, treats it as the maximum monthly housing payment, and works backwards to a mortgage amount and home price. Because the housing payment here is treated as principal and interest only, leave room for property tax, insurance and any HOA fees: reduce the result by roughly 20% for a realistic buying budget.
The formula
Front-end test: housing ≤ gross monthly income × 0.28. Back-end test: housing ≤ gross monthly income × 0.36 − other monthly debts. Use the smaller value as the maximum payment, then invert the amortisation formula:
loan = housing · (1 − (1 + r)^−n) / r
home price = loan + down paymentwith r = APR ÷ 12 ÷ 100 and n = months in the term.
Worked example
On a 100,000 income with 500 of monthly debt and a 40,000 down payment, the housing cap is $2,333.33 a month. At 6.50% over 30 years that supports a mortgage of $369,159, or a home price of about $409,159.
Common mistakes
- Spending the maximum. Pre-approval is a ceiling, not a budget. Daycare, commuting, repairs and savings all compete with the payment; target 25–30% of take-home pay instead.
- Forgetting the other house costs. Property tax, insurance, HOA dues and maintenance (budget about 1% of the home's value a year) are not in this number.
- Counting overtime as guaranteed income. Lenders average variable income, and a change in hours can make the payment unaffordable. Base the plan on stable salary.
Frequently asked questions
What is a good debt-to-income ratio for a mortgage?
Most lenders want a total DTI around 36% or lower, with some conventional and FHA programmes allowing up to 43–50% when compensating factors exist. Lower is safer: it leaves room for repairs and rate changes in other debts.
How much should my down payment be?
20% avoids private mortgage insurance and usually earns a better rate. But 5–10% can be reasonable if it leaves you with an emergency fund; the extra cost of mortgage insurance is often smaller than the risk of being house-poor.
Does the calculator include property tax and insurance?
No — it estimates the mortgage principal and interest. Property tax and homeowners insurance typically add 15–30% of the P&I figure in the US, so keep that margin when deciding what to spend.
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