Mortgage & Home
Mortgage Affordability Calculator
Work out the most expensive home your income and existing debts support, using the ratios lenders conventionally apply — and see which of the two actually limits you.
What you can afford
Estimated maximum home price
$447,451
A ceiling under one common lender convention, not a recommendation.
The 28% housing guideline is the limit here. Your existing debts leave room to spare.
The two caps
- Housing at 28% of income
- $2,800.00
- All debt at 36%, less what you owe
- $3,000.00
- Monthly housing allowance
- $2,800.00
Where that payment goes
- Principal & interest
- $2,259.33
- Property tax
- $410.16
- Home insurance
- $130.51
- HOA fees
- —
- PMI
- —
The loan behind it
- Amount borrowed 20.1% of this price — 20% or more, so no PMI
- $357,451
- Loan to value
- 79.9%
- Debt-to-income today
- 6%
- Gross monthly income
- $10,000.00
On $120,000 a year with $600.00 of monthly debt payments, the 28/36 convention supports a housing payment of about $2,800.00.That prices a home at roughly $447,451 with $90,000 down, with no PMI because the down payment reaches 20%. This is a ceiling under one common lender convention, not a recommendation — and a lender's own underwriting may allow less.
Not a pre-approval. A lender also underwrites your credit history, employment and the property itself, and may allow less than this.
What this calculates
This works backwards from your income to a home price. It takes the share of your gross income that lenders conventionally allow for housing, subtracts what the property itself will cost you every month in tax, insurance, HOA fees and PMI, and converts whatever is left into the largest loan that payment supports. Because tax and insurance are percentages of the price you are solving for, the price and the payment depend on each other — the calculator solves them together rather than guessing and checking.
How it works
Two caps, both applied:
housing cap = gross monthly income × 28%
total cap = gross monthly income × 36% − existing debt payments
allowance C = the LOWER of the two
Then solve for the price H, with A = annuity factor,
t = tax rate, n = insurance rate, p = monthly PMI rate,
D = down payment:
C − hoa = (H − D)/A + H(t + n)/12 + (H − D)p
H = ─────────────────────────────────
C − hoa + D(1/A + p)
─────────────────────────────────
1/A + p + (t + n)/12Lenders conventionally look at two ratios. The front-end ratio caps housing costs at a share of gross monthly income — 28% is the figure usually quoted. The back-end ratio caps housing plus every other debt payment at a higher share, usually 36%. Whichever produces the smaller housing allowance is the one that binds, and the calculator tells you which one it is, because that determines what you can do about it. If the housing ratio binds, only more income helps. If your existing debts bind, paying down a card raises your budget directly.
The allowance then has to cover more than the loan. Property tax, insurance, HOA fees and PMI all come out of the same monthly figure before a single dollar reaches principal and interest. This is why a higher property tax rate reduces how much house you can buy even though it has nothing to do with the loan.
PMI deserves particular attention, because leaving it out is the most common way these calculators overstate what you can afford. Below 20% down, a premium is charged on the loan balance every month, and it comes out of the same allowance. A calculator that ignores it will tell you that you can afford roughly twenty thousand dollars more house than you actually can, at typical rates. This one includes it, which is why the answer moves when you cross the 20% threshold.
That threshold also makes the maths awkward in an interesting way. PMI only applies while you owe more than 80% of the value, so the monthly cost jumps at the price where your down payment is exactly 20%. The calculator solves the problem both ways — with the premium and without it — and uses whichever answer is internally consistent with its own result.
A worked example
A household earning $120,000 a year with $600 a month of existing debt payments and $30,000 saved, expecting 6.5% over 30 years, in a county with 1.1% property tax.
Gross monthly income is $120,000 ÷ 12 = $10,000.
The housing cap is 28% of that, or $2,800. The total-debt cap is 36% of $10,000 = $3,600, less the $600 of existing payments, which leaves $3,000. The lower of the two binds, so the allowance is $2,800 and the housing ratio is the constraint. The existing debt is not what is holding this buyer back.
Now that $2,800 has to stretch. With $30,000 down the buyer is well under 20%, so PMI applies at 0.5% a year on the balance — about $145 a month. Property tax at 1.1% and insurance at 0.35% together take roughly 0.12% of the price every month. What remains goes to principal and interest.
Solving the two together gives a home price of about $377,800, with a loan of roughly $347,800.
The instructive part is what happens if PMI is ignored. Drop the premium from the calculation and the same $2,800 appears to support about $397,100 — nearly $19,300 more. That difference is not a rounding artefact; it is a house the buyer could not actually make the payments on. It is also the single most common flaw in affordability calculators.
Raising the down payment to $95,000 crosses the 20% line. PMI disappears, the whole allowance goes to the loan and the property, and the affordable price rises to about $451,600 — a jump much larger than the extra cash alone would suggest, because the premium vanishes at the same time.
What this assumes
- The 28% and 36% ratios are an industry convention, not a legal requirement and not a guarantee of approval. No primary source establishes them.
- Income is gross — before tax — because that is what these ratios are conventionally applied to.
- The interest rate is fixed for the whole term.
- Property tax and insurance are estimated as percentages of the purchase price and held flat. In practice both tend to rise.
- PMI is charged monthly on the loan balance whenever the down payment is under 20% of the price.
- Every dollar of the allowance not consumed by tax, insurance, HOA fees or PMI is available for principal and interest.
What it does not model
- This is not a pre-approval and not a lending decision. A lender underwrites your credit history, employment record, assets and the property itself, none of which appear here.
- Closing costs are not modelled. They typically run several percent of the price and come out of the same savings as your down payment, so the cash you can actually put down is usually less than the cash you have.
- It does not model FHA, VA or USDA loans, which use different ratios and different mortgage insurance rules entirely.
- It assumes your existing debt payments stay as they are. A loan that ends in two years frees that capacity up; a growing card balance does the opposite.
- It says nothing about whether you SHOULD borrow this much. The ratios ignore childcare, medical costs, retirement saving and how secure your income is.
- Student loans in deferment or on income-driven plans are counted differently by different lenders, so the figure you should enter for them is genuinely ambiguous.
Questions
Is the 28/36 rule an actual requirement?
No, and it is worth being clear about this because it is widely presented as though it were. The 28/36 ratios are an industry convention — a rule of thumb that lenders and loan officers use in conversation. They do not appear in Fannie Mae's Selling Guide, they are not in the CFPB's debt-to-income material, and 24 CFR 203.33 contains no percentages at all. The federal Qualified Mortgage rule, which does govern lending, was amended in 2020 to remove its DTI ceiling entirely in favour of a price-based test. So treat the result here as a widely used yardstick, not a threshold you must meet or a limit you cannot exceed.
Why is the answer lower than other calculators give me?
Most often because this one includes PMI when your down payment is under 20%, and many do not. At typical rates that omission overstates the affordable price by around $19,000 on a $30,000 down payment — the premium comes out of the same monthly allowance as everything else, so ignoring it leaves more room for the loan than really exists. The other common difference is property tax: a calculator using a 0.5% national-average placeholder will produce a much larger number than one using the 1.1% closer to a real median, and tax varies more by county than almost any other input here.
Which ratio is limiting me, and what should I do about it?
The calculator names it directly above the result, because the answer changes what helps. If the housing ratio binds, your existing debts already leave room to spare and only more income or a larger down payment raises your budget. If the total-debt ratio binds, your other payments are the constraint — and paying off a card or an auto loan raises what you can borrow immediately, often by far more than the balance you cleared would suggest.
Should I borrow the maximum this shows?
Almost certainly not. This is a ceiling derived from one convention applied to gross income, and gross income is not what you live on. It takes no account of childcare, medical costs, retirement contributions, how variable your income is, or what you would do if one earner stopped working. A payment at the top of this range leaves very little room for the things that actually go wrong. Many people deliberately target something below it, and the calculator is at least as useful run in reverse — enter a payment you are comfortable with and see what price it supports.
Does a bigger down payment raise my budget dollar for dollar?
Less than dollar for dollar in normal circumstances, and much more than dollar for dollar at one specific point. Extra cash raises the price you can reach, but the pricier home also carries more tax and insurance, which eat part of the same allowance — so at typical rates each extra dollar down buys about 84 cents of additional price. The exception is crossing 20%, where PMI disappears from the payment entirely. That frees up the whole premium at once, and the affordable price jumps by considerably more than the extra cash you added.
What counts as a monthly debt payment?
The recurring obligations that appear on your credit report: minimum credit card payments, auto loans, student loans, personal loans, and court-ordered payments like child support or alimony. Not utilities, groceries, phone bills, insurance premiums or subscriptions — those affect your real budget considerably but are not what these ratios measure. Use the minimum due on revolving accounts rather than what you usually pay, since that is the figure a lender uses.
Sources
- Consumer Financial Protection Bureau — Understanding debt-to-income ratio (opens in a new tab)
How debt-to-income ratio is defined and which obligations count toward it. Note that this source does not establish the 28/36 figures.
- 12 CFR 1026.43(e)(2) — Qualified Mortgage standards (opens in a new tab)
The rule that actually governs ability-to-repay underwriting, and which as amended contains no DTI ceiling — the basis for describing 28/36 as convention rather than requirement.
- Homeowners Protection Act of 1998, 12 U.S.C. §4902 — termination of private mortgage insurance (opens in a new tab)
The statutory 78% automatic termination and 80% request thresholds that determine when PMI stops being part of the payment.
- Consumer Financial Protection Bureau — Owning a home: loan options (opens in a new tab)
Loan programme differences, including why FHA and VA ratios are not modelled here.
- Formula reviewed
- Formula version
- 1
Version 1 means the formula has not changed since this page was published. If it changes, this number moves and the change is described here.