How to use this home affordability calculator
- Income and debts — gross household income for everyone on the loan, and the minimum monthly payments on your credit report (car, student, card and personal loans, plus child support). Leave out rent, utilities and groceries.
- Down payment — cash toward the price. Keep separate money for closing costs and emergencies.
- Rate, term, tax and insurance — these turn a monthly budget into a home price.
- DTI limits — 28% and 36% are the classic conventional-loan guideline. Lower them for more breathing room.
The 28/36 rule: front-end and back-end ratios
Lenders measure affordability with two debt-to-income (DTI) ratios, both based on gross monthly income:
- Front-end ratio — the housing payment (principal, interest, property tax and insurance, known as PITI) divided by income. The guideline is 28% or less.
- Back-end ratio — the housing payment plus every other monthly debt payment, divided by income. The guideline is 36% or less.
Your housing budget is the smaller of the two. Once other debts pass 8% of gross income (the gap between 36% and 28%), the back-end limit takes over, and every extra dollar of debt payment removes a dollar from your housing budget. The calculator tells you which ratio is binding, so you know whether paying off a car loan would actually raise your price range.
How the maximum price is calculated
First the monthly budget: B = min(28% × income ÷ 12, 36% × income ÷ 12 − debts). That budget must cover principal and interest on the loan, property tax and insurance — and both the loan and the tax depend on the price:
B = f × (Price − Down payment) + Price × t + Insurance ÷ 12
Here f is the monthly payment per dollar borrowed (from the standard amortization formula) and t is the yearly property tax rate ÷ 12. Solving for the price gives:
Price = (B − Insurance ÷ 12 + f × Down payment) ÷ (f + t)
Worked example
A household earns $100,000 a year, pays $500 a month on a car loan, has $60,000 for a down payment and is quoted 6.5% on a 30-year loan. Property tax is 1.1% and insurance is $1,500 a year.
- Gross monthly income: $100,000 ÷ 12 = $8,333.33
- Front-end limit: 28% × $8,333.33 = $2,333.33
- Back-end limit: 36% × $8,333.33 − $500 = $2,500.00
- The front-end limit is lower, so the housing budget is $2,333.33.
- Solving the equation gives a maximum price of about $357,531 with a $297,531 loan: $1,880.60 principal and interest, $327.74 property tax and $125.00 insurance each month.
Maximum home price by income
Same assumptions as the example ($500 of monthly debts, $60,000 down, 6.5% for 30 years, 1.1% property tax, $1,500 insurance):
| Income | Housing budget | Binding limit | Max home price |
|---|---|---|---|
| $60,000 | $1,300.00 | Back-end | $214,753 |
| $80,000 | $1,866.67 | Front-end | $293,050 |
| $100,000 | $2,333.33 | Front-end | $357,531 |
| $125,000 | $2,916.67 | Front-end | $438,131 |
| $150,000 | $3,500.00 | Front-end | $518,732 |
At $60,000 the $500 car payment is more than 8% of income, so the back-end limit binds. Paying off that loan would raise the budget there, but not at the higher incomes.
What this estimate leaves out
- Mortgage insurance. With less than 20% down, conventional loans add PMI and FHA loans add a mortgage insurance premium. Both use part of your budget.
- HOA dues. Lenders count association dues as housing cost, so a home with dues supports a smaller loan than one without.
- Lender flexibility. Many lenders approve back-end ratios above 36% with strong credit, and FHA and VA programs set their own limits. Approval for more does not mean more is comfortable.
Results are estimates for planning. A lender’s preapproval, based on your credit report and documented income, is the figure that counts. Once you have a price in mind, test it in the mortgage calculator.
Frequently asked questions
What is the 28/36 rule?
It is a lending guideline: spend no more than 28% of gross monthly income on housing (principal, interest, taxes and insurance) and no more than 36% on housing plus all other debt payments combined.
Should I include my partner’s income?
Include both incomes only if both of you will be on the mortgage — and then include both sets of debts too. Lenders qualify the loan on the borrowers listed on the application.
Does a bigger down payment raise how much I can afford?
Yes, but by a little less than dollar for dollar, because a more expensive home carries more property tax. In the example above, each extra $1,000 down raises the maximum price by about $873.
Why does paying off debt sometimes not change my result?
If the front-end limit is binding, your debts are already low enough that the housing ratio is what caps you. Paying off debt only helps when the back-end limit is the binding one.
Should I buy the most expensive home I qualify for?
Not necessarily. The ratios ignore childcare, retirement saving, commuting and maintenance, which often runs to 1% or more of the home’s value a year. Many buyers aim below the maximum to keep room in their budget.
Last updated: October 8, 2026