Mortgage Affordability Calculator
Calculate how much house you can afford based on your income, debt, and down payment. Uses the 28% and 36% debt-to-income rules.
Reviewed by the Calcura editorial team · Last reviewed
- Question
- How much house can I afford?
- Answer
- Most lenders use the 28/36 rule: your housing costs (PITI) should not exceed 28% of gross monthly income, and your total debt (PITI + all other debt payments) should not exceed 36% of gross monthly income. At $100,000/year gross income ($8,333/month), the housing cap is ~$2,333/month. The lower of the two caps determines your max payment, which you invert through the mortgage formula to get a max loan amount.
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- Formula
max_PITI ≤ 0.28 × gross_monthly; max_PITI + debts ≤ 0.36 × gross_monthly- Caveats
- PITI includes principal, interest, property tax, homeowners insurance, and PMI — not just P&I.
- Underwriting ceiling ≠ target. Most financially healthy households spend well below the limits.
- FHA and VA loans use different DTI rules (often 31/43) and allow more flexibility.
What This Calculator Does
This calculator applies the long-standing 28/36 debt-to-income rules to estimate how much house you can afford. The 28% rule caps housing costs (principal, interest, taxes, insurance, PMI) at 28% of gross monthly income; the 36% rule caps total debt (housing plus car loans, student loans, credit card minimums) at 36%. The lower of the two caps wins. The tool then inverts the mortgage amortization formula to convert that maximum payment into a maximum loan amount, and adds your down payment to produce a maximum home price. Treat these numbers as an underwriting ceiling, not a target — most lenders qualify you for more than you should actually spend.
When To Use This Calculator
Pre-shopping before mortgage pre-approval
You earn $120,000 gross, carry $600/month in debt, and have $60,000 saved. Running the calculator at 6.5% for 30 years returns a ~$475,000 max home price — useful for filtering Zillow searches before you talk to a lender.
Stress-testing a higher rate environment
You were pre-approved at 6.0% six months ago; rates are now 7.25%. Re-running affordability at the higher rate with the same income shows your max home price drops by roughly 10%, which tells you to adjust your search or bring more down.
Understanding how paying off debt changes your budget
Clearing a $400/month car loan typically raises your 36%-rule housing cap by the same $400, which at 6.5% / 30 years adds roughly $63,000 to your maximum loan amount.
Comparing 15-year vs. 30-year affordability
A 15-year mortgage at the same rate requires a payment roughly 40–45% higher than a 30-year, which cuts the max home price you qualify for substantially — a real trade-off between total interest and affordability.
How It Works
The calculator first computes the smaller of two monthly payment caps: 28% of gross monthly income, or 36% of gross monthly income minus your existing non-housing debt payments. That cap is then converted to a loan principal by inverting the standard amortization formula, using your interest rate and loan term. Adding your down payment produces the max home price. Two caveats: (1) the 28% cap should include principal, interest, taxes, insurance, and PMI — this calculator uses the cap as the P&I payment, so in practice your affordable home price will be lower once you add taxes and insurance; (2) most lenders will actually approve DTIs up to 43% under the CFPB Qualified Mortgage rule, and sometimes higher with compensating factors, so this tool is conservative.
Formula
Max P&I = min(Income/12 × 0.28, Income/12 × 0.36 − Other Debt); Max Loan = M × ((1+r)^n − 1) / (r × (1+r)^n)Real-World Example
Scenario
Jordan and Sam earn $150,000 combined, have a $450/month car loan and $150/month minimum credit card payment, $60,000 saved for a down payment, and are looking at a 30-year mortgage at 6.75%.
Calculation
Gross monthly income: $150,000 ÷ 12 = $12,500 28% cap: $12,500 × 0.28 = $3,500 36% cap: $12,500 × 0.36 − $600 = $3,900 Lower of the two: $3,500 for P&I Max loan at 6.75% / 30 yr: $3,500 × ((1.005625)^360 − 1) / (0.005625 × (1.005625)^360) ≈ $539,900 Max home price: $539,900 + $60,000 = $599,900
Result
The 28% rule is the binding constraint here. That $599,900 figure assumes the full $3,500 goes to principal and interest; once property taxes (~1.2% of value) and insurance (~0.5% of value) are layered in, the realistic affordable home price drops closer to $500,000 — which is why the CFPB recommends budgeting for the full PITI payment, not just P&I.
Common Mistakes to Avoid
Mistake: Treating the max as a target
Solution: The 28/36 cap is what a lender will approve, not what you should spend. Many planners recommend keeping PITI below 25% of gross or below 30% of take-home to leave room for retirement savings, repairs, and life changes.
Mistake: Using net income instead of gross
Solution: The 28/36 rules are defined against gross (pre-tax) income, consistent with how lenders underwrite. Using net income will understate the loan amount a lender will approve — though it may be the right conservative choice for your actual budget.
Mistake: Forgetting taxes, insurance, HOA, and PMI
Solution: 'Housing cost' in the 28% rule means PITI — principal, interest, taxes, insurance, and PMI if your down payment is under 20%. Taxes alone can add $500–$1,500/month in higher-cost metros. A pure P&I calculation will overstate the home price you can comfortably carry.
Mistake: Ignoring reserves and closing costs
Solution: Lenders typically want 2–6 months of mortgage reserves left over after closing, and closing costs run 2–5% of the loan amount. If your entire down payment is your only cash, you're likely to run into trouble at underwriting.
Mortgage Affordability vs. Related Calculators
Mortgage Calculator
Once you pick a home price, use this to compute the exact monthly payment and total interest. Affordability sets the ceiling; this tool prices a specific deal.
DTI Calculator
Compute your current front-end and back-end DTI ratios from existing debt — useful for sanity-checking a lender's pre-approval letter.
Loan Payment Calculator
A generic amortization tool — use it for auto loans, personal loans, or other installment debt not covered by mortgage-specific rules.
When This Isn't the Right Tool
FHA, VA, or USDA loans with different DTI ceilings
Use instead: Government-backed loans can allow higher DTIs (FHA up to ~50% with compensating factors, VA has no hard cap but uses residual income). Use a lender's program-specific affordability calculator or talk to a loan officer.
Self-employed, commission, or bonus-heavy income
Use instead: Underwriters typically average 24 months of documented self-employment income and may discount bonus/commission pay. If your income is variable, enter a conservative number — or consult a mortgage broker who specializes in non-W-2 borrowers.
Jumbo loans or investment properties
Use instead: Jumbo loans (above the conforming limit) and investment property loans use tighter DTI ratios (often 36–43%) and higher down payment requirements. This calculator's 28/36 heuristic will overstate affordability in those cases.
Markets with very high property taxes or HOA fees
Use instead: In New Jersey, Texas, Illinois, or condo-heavy markets, taxes and HOA can consume 25–40% of the monthly housing payment. Use a full PITI calculator that lets you enter taxes and HOA explicitly rather than relying on the 28/36 shortcut.
How to Verify This Calculation
Most lender affordability tools (Bankrate, NerdWallet, Zillow) will produce a similar max home price if you enter identical inputs and disable taxes/insurance. For a true second opinion, get pre-approved — the lender will run your credit, verify income, and give you an actual qualification letter rather than a heuristic.
Sources
- Consumer Financial Protection Bureau — How much house can I afford? — CFPB's home-buying guide covers affordability, pre-approval, and the full PITI concept.
- CFPB — Ability-to-Repay and Qualified Mortgage Rule — The QM rule that sets the 43% back-end DTI ceiling for many conforming loans, plus the Ability-to-Repay requirements lenders must document.
- Fannie Mae — Selling Guide: DTI Ratios — Fannie Mae's underwriting guide for conforming loans, including maximum DTI ratios and compensating factors.
Reviewed by the Calcura editorial team · Last reviewed