Mortgage
How Much House Can I Afford Calculator (28/36 Rule)
A house affordability calculator applies the 28/36 rule — housing under 28% of gross income, total debt under 36% — and solves for the largest home those caps support. A $120,000 income with $500 in monthly debts at 6.5% over 30 years and 20% down supports a $443,647 home, a $2,800 monthly housing budget.
Currency changes the displayed symbol only — figures are not converted by an exchange rate.
With $120,000 a year in gross income and $500 in monthly debts, the 28% housing rule allows $2,800 a month and the 36% total-debt rule leaves $3,100 — the 28% housing rule binds at $2,800. After $557 in tax, insurance, and PMI, that supports $2,243 a month in principal and interest: a $354,918 loan and a $443,647 home at a 20% down payment.
Disclaimer: This calculator is provided for educational and estimation purposes only and does not constitute formal financial advice.
What this calculator actually answers
Most “how much house” tools take a guess disguised as a multiplier — “three times your income.” This one does the reverse of a mortgage payment calculator: instead of pricing a specific loan, it applies the two underwriting ratios lenders actually use, subtracts the non-loan pieces of the housing bill (property tax, insurance, and PMI when the down payment is thin), and solves the amortization formula for the largest loan — and therefore the largest home — those caps leave room for.
The 28/36 rule, and which half binds
The rule has two caps, both against gross monthly income G:
The first cap, the front-end ratio, limits the housing payment itself to 28% of gross income. The second, the back-end ratio, limits housing plus all other debt to 36%, which leaves $0.36G minus your other payments for housing. Whichever of the two allows less is the binding one, and the calculator names it in the results rather than silently averaging the two — because the answer to “which rule binds” tells you what to fix. On the default example, $10,000 of monthly gross income allows $2,800 under the front-end rule and $3,100 under the back-end (after $500 of debts), so the front-end rule binds at $2,800. Raise the debts to $1,000 and the back-end rule takes over at $2,600 — the two caps swap places, and the affordable price falls with them.
Solving the mortgage formula backward
The monthly principal-and-interest payment M for a loan L is the standard amortization formula. The affordability question is its inverse — what L does a given M support:
With the down payment entered as a percentage, the tax and PMI shares scale linearly with the loan, so the budget equation solves directly: the $2,800 housing budget, minus $556.68 in tax, insurance, and (absent PMI) nothing else, leaves $2,243.32 a month for principal and interest, which at 6.5% over 30 years supports a $354,918 loan — a $443,647 home at 20% down.
The down payment table has one dramatic row
| Down payment | Max home price | Max loan | Monthly PMI | Monthly P&I | Tax + insurance + PMI |
|---|---|---|---|---|---|
| 3% | $346,225 | $335,839 | $209.90 | $2,122.73 | $677.27 |
| 5% | $352,625 | $334,994 | $209.37 | $2,117.39 | $682.61 |
| 10% | $369,710 | $332,739 | $207.96 | $2,103.14 | $696.86 |
| 15% | $388,535 | $330,255 | $206.41 | $2,087.43 | $712.57 |
| 20% | $443,647 | $354,918 | $0.00 | $2,243.32 | $556.68 |
| 25% | $468,432 | $351,324 | $0.00 | $2,220.60 | $579.40 |
All rows hold the $120,000 income, $500 debts, 6.5% rate, 30-year term, 1.1% tax, and $1,800 insurance constant. From 3% to 15% down the price creeps up as PMI and tax share the same fixed budget. The jump from 15% to 20% is the story: PMI disappears entirely, freeing $206.41 a month of premium for principal and interest, and the affordable price leaps from $388,535 to $443,647. Past 20%, the price keeps climbing but the loan stops growing — at 25% down the same budget supports $351,324 of loan, less than at 20%, because each borrowed dollar now carries more home price and therefore more property tax. The sweet spot is exactly at the PMI line.
The rate decides the price more than the down payment does
| Rate | Max home price | Max loan | Monthly P&I |
|---|---|---|---|
| 5.5% | $485,439 | $388,351 | $2,205.01 |
| 6.0% | $463,849 | $371,079 | $2,224.81 |
| 6.5% | $443,647 | $354,918 | $2,243.32 |
| 7.0% | $424,742 | $339,793 | $2,260.65 |
All rows hold the default income, debts, 20% down, 30-year term, and tax constant. A half-point of rate moves the affordable price by roughly $20,000, and the effect compounds because 30 years of payments give the difference decades to work. Notice the P&I column moves the other way: at a lower rate the same budget buys a bigger home, which carries more property tax, which leaves less room for principal and interest. The budget is fixed; the split inside it is what shifts.
Income and debts: the two levers you actually control
| Gross income | Housing budget | Max home price | Max loan |
|---|---|---|---|
| $80,000 | $1,867 | $287,394 | $229,915 |
| $100,000 | $2,333 | $365,521 | $292,417 |
| $120,000 | $2,800 | $443,647 | $354,918 |
| $150,000 | $3,500 | $560,837 | $448,670 |
| Monthly debts | Binding rule | Housing budget | Max home price |
|---|---|---|---|
| $0 | Front-end | $2,800 | $443,647 |
| $500 | Front-end | $2,800 | $443,647 |
| $1,000 | Back-end | $2,600 | $410,165 |
| $1,500 | Back-end | $2,100 | $326,458 |
Both tables hold the other inputs at their defaults. The income table shows a $30,000 raise worth roughly $78,000-$117,000 of price — income is the dominant lever. The debt table shows the back-end ratio silently taking over: at $1,000 of monthly debts the binding rule flips, and at $1,500 the affordable price has fallen $117,000 from the debt-free case. Once the back-end ratio binds, each additional dollar of monthly debt costs roughly $156 of home price at these settings.
What this model does not capture
The 28/36 rule is a guideline, not a law — Fannie Mae and Freddie Mac both allow higher back-end ratios with compensating factors, and some lenders approve well above them. The property tax default approximates a national average but ranges from under 0.3% to over 2% by county, worth thousands of dollars a year on the same price; insurance is equally local. The calculator also holds PMI flat for display rather than modeling its mid-loan cancellation, and it prices only the mortgage — not utilities, HOA dues, maintenance, or the furnishing budget every first home swallows. Use the result as the lender-side ceiling, then sanity-check the payment against the real household budget before signing anything.
Using the numbers well
Run the calculator at the rate actually quoted and the real local tax rate, not the defaults, because both move the answer materially. Check the “binding rule” readout: if the back-end binds, paying down a car loan or credit card is worth more than saving a larger down payment; if the front-end binds, the income side is the lever. And treat the max price as a ceiling you plan to stay under, not a target to hit — the same arithmetic that makes the number affordable on paper is what makes it uncomfortable when property taxes rise or a job changes. The mortgage payment calculator prices the resulting loan at that same rate and tax.
Frequently asked questions
What is the 28/36 rule?
It is the shorthand version of the two ratios conventional lenders apply to gross monthly income: housing costs should stay under 28% of it, and housing plus all other debt payments should stay under 36%. The first limits the house; the second limits the house after your existing debts. This calculator applies both and uses whichever allows less — the binding ratio — as the working budget, then shows you which one it was.
Does the down payment change how much house I can afford?
Yes, in two directions. A larger down payment means a smaller loan for the same price, and it removes private mortgage insurance once it reaches 20%, freeing that monthly premium for principal and interest. In the default example, moving from 15% to 20% down raises the affordable price by about $55,000 — partly the smaller loan, mostly the vanished PMI. But a larger down payment also means less liquid cash, which is a risk trade-off, not just a price gain.
Should I use gross or take-home income?
The 28/36 rule is quoted against gross income, and lenders underwrite against it, so this calculator uses gross. Real budgets live on take-home pay, though, and the gap can be 25% or more once taxes, health insurance, and retirement contributions come out. A safe approach is to run the calculator at gross income to see the lender-side ceiling, then mentally check the resulting payment against the actual household budget before treating the number as a target.
What happens when my other debts are high?
The back-end ratio takes over. With $1,000 a month of car and student-loan payments, the default example's 36% allowance drops from $3,100 to $2,600 and becomes the binding cap, cutting the affordable price from $443,647 to $410,165. Once the back-end ratio binds, each additional dollar of monthly debt removes roughly $156 of home price at these settings — which is why paying down a car loan before house hunting is often worth more than saving a few thousand more for the down payment.
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