Real Estate / Home Affordability Calculator
🏡 Home Buying 🆓 Free 28/36 Rule

🏡 Home Affordability Calculator

Enter your annual income, monthly debts, down payment, and interest rate to instantly see how much house you can afford. Get three price scenarios - conservative, moderate, and maximum - with the full monthly payment breakdown including principal, interest, taxes, insurance, and PMI. Based on the 28/36 rule and 2025 lender DTI guidelines.

🏡 How Much House Can You Afford?

💰 Income
💳 Monthly Debt Payments
🏠 Loan Details

⚠️ Disclaimer: Estimates only. Actual loan approval depends on credit score, lender policies and other factors. Consult a licensed mortgage professional.

📊 Debt-to-Income (DTI) Analysis

DTI is the most important factor lenders use. Run the calculator first to see your personalised DTI analysis.

Run the calculator first.

📋 DTI Thresholds by Loan Type

Loan Type Max Front DTI Max Back DTI Notes

📐 How Home Affordability Is Calculated

The 28/36 Rule

The most widely used lender guideline: 28% Rule (Front-End DTI): Monthly housing costs ≤ 28% of gross monthly income Housing costs = Principal + Interest + Tax + Insurance (PITI) 36% Rule (Back-End DTI): All monthly debts ≤ 36% of gross monthly income All debts = PITI + car loan + student loan + credit cards + etc. Conservative example: $10,000/month gross income Max housing (28%) = $2,800/month Max all debts (36%) = $3,600/month If existing debts = $900/month → housing budget = $2,700/month

Step 1 - Max Monthly Housing Payment

Monthly Gross Income = Annual Income ÷ 12 Front-End Max = Monthly Income × 28% Back-End Max = Monthly Income × 36% − Existing Debts Max Housing Payment = min(Front-End Max, Back-End Max) PITI = Principal + Interest + Property Tax + Insurance + HOA ≤ Max Housing Payment

Step 2 - Max Loan Amount from Payment

Available for P&I = PITI Max − Tax/mo − Insurance/mo − HOA/mo Max Loan = Available P&I × [(1+r)ⁿ − 1] / [r × (1+r)ⁿ] Where r = monthly rate, n = term in months (This is the inverse of the payment formula) Max Home Price = Max Loan + Down Payment

PITI Explained

P - Principal: Portion of payment reducing loan balance I - Interest: Portion going to lender as interest T - Taxes: Monthly escrow for property taxes I - Insurance: Monthly escrow for homeowner's insurance + PMI: Private Mortgage Insurance if down < 20% + HOA: Homeowners Association fees (if applicable) Lenders use total PITI (not just P&I) for DTI calculation.

PMI - Private Mortgage Insurance

Required when down payment < 20% of home price. Typical cost: 0.5% – 1.5% of loan amount per year. Example: $350,000 loan → ~$146–$438/month PMI PMI is cancelled automatically when LTV reaches 78% (or you can request removal at 80% LTV). Putting 20% down avoids PMI entirely - saving hundreds per month.

❓ Frequently Asked Questions

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📐 Affordability Rules

Front-End DTI max28%
Back-End DTI max36–43%
FHA max back DTI43–50%
Min down (FHA)3.5%
Min down (Conventional)3–5%
No PMI threshold20% down
Income multiplier (3×)Conservative
Income multiplier (5×)Aggressive

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Home Affordability Calculator - How Much House Can You Actually Afford?

Lenders will tell you the maximum amount they'll lend. That number is not what you can afford - it's the ceiling at which your application won't be rejected. What you can comfortably afford is usually 15–25% below that maximum, once you account for property taxes, insurance, maintenance, and keeping enough financial flexibility to handle emergencies, retirement savings, and life changes. This calculator shows you the conservative, comfortable, and maximum ranges so you can make a genuinely informed decision.

Quick example - $9,000/month gross income, $500/month in existing debts, 10% down, 7% rate: 28% front-end maximum = $2,520/month housing. 36% back-end maximum = $3,240 total debt − $500 existing = $2,740 max housing. Binding constraint = $2,520. At 7%, 30 years, 10% down: this supports a home price of approximately $325,000. Conservative target (25% front-end): approximately $290,000.

The 28/36 Rule Explained - And Its Modern Variations

The 28/36 rule has been the standard mortgage qualification guideline for decades:

Front-End Ratio (28%)

  • Monthly PITI ÷ Gross Monthly Income ≤ 28%
  • PITI = Principal + Interest + Property Taxes + Insurance
  • PMI included when down payment is below 20%
  • HOA fees sometimes included by lenders
  • 28% is the traditional target; 25% is comfortable; 30% is stretched
  • Example: $8,000/month income × 28% = $2,240 max housing

Back-End Ratio (36%)

  • All monthly debts ÷ Gross Monthly Income ≤ 36%
  • Includes: housing + car loans + student loans + credit card minimums
  • 36% is the traditional guideline; 43% is commonly approved
  • Fannie Mae/Freddie Mac allow up to 45–50% with compensating factors
  • FHA loans allow up to 50% back-end DTI in some cases
  • Higher DTI = less financial flexibility for savings and emergencies

What Income Do You Need for Common Home Prices?

Using 7% rate, 30-year loan, 20% down, estimated taxes and insurance (1.5% of home value/year), and the 28% front-end rule:

  • $250,000 home: P&I ≈ $1,329 + taxes/insurance ≈ $313 = $1,642/month. Min income = $1,642 ÷ 0.28 ≈ $5,864/month = $70,400/year
  • $350,000 home: P&I ≈ $1,862 + $438 = $2,300/month. Min income ≈ $98,600/year
  • $500,000 home: P&I ≈ $2,661 + $625 = $3,286/month. Min income ≈ $140,800/year
  • $750,000 home: P&I ≈ $3,991 + $938 = $4,929/month. Min income ≈ $211,200/year
  • $1,000,000 home: P&I ≈ $5,322 + $1,250 = $6,572/month. Min income ≈ $281,600/year

With 10% down and PMI (~0.75% annually), add approximately $85–$625/month to housing costs depending on loan size, which raises the income required by 10–15%.

The Hidden Costs That Lenders Don't Count

A mortgage approval is based only on your ability to make the monthly payment - it doesn't account for everything owning a home actually costs. Before buying at your maximum approval amount, budget realistically for:

  • Maintenance and repairs: Budget 1–2% of home value per year. On a $400,000 home: $4,000–$8,000/year (or $333–$667/month). This is not optional - older homes, larger lots, pools, and aging systems regularly generate unexpected costs.
  • Utilities: A larger home means higher electricity, gas, water, and waste management bills. Older homes may have much higher heating and cooling costs.
  • HOA fees: Common in condos, townhomes, and planned communities. Can range from $100 to $1,500+ per month. Some lenders include these in DTI; some don't.
  • Furnishing and moving: A bigger home requires more furniture. First-time buyers often underestimate this by $5,000–$20,000.
  • PMI removal timeline: At 20% down, PMI is eliminated from day one. At 5% down, you'll pay PMI for approximately 7–10 years before reaching 20% equity - costing $15,000–$50,000 over the term depending on loan size.

How to Increase Your Home Buying Budget

If the calculator's result is below your goal, these are the levers that increase buying power:

  1. Pay down existing debts - Paying off a $400/month car loan frees up that DTI room and can increase your buying power by $40,000–$60,000 on a moderate income.
  2. Increase income - Even a modest documented pay raise changes the calculation. Lenders use year-to-date pay stubs - a recent raise helps immediately.
  3. Improve credit score - Moving from 680 to 740+ can reduce your rate by 0.25–0.75%, meaningfully affecting the payment.
  4. Increase down payment - More down = smaller loan = lower payment, and eliminates PMI at 20%+.
  5. Add a co-borrower - A co-borrower's income and credit are included in the approval calculation.