Home Affordability Calculator

Find out how much house you can afford. This calculator uses your income, monthly debts, and down payment to estimate a home price that aligns with standard lending guidelines for debt-to-income (DTI) ratios.

Car loans, student loans, credit card minimums, etc.
As a % of home price
As a % of home price

You Can Afford a Home Priced At:

$0

Based On This Estimate:

Affordable Monthly Payment (PITI) $0.00
Estimated Loan Amount $0.00

How the Mortgage Affordability Calculator Works

This mortgage affordability calculator is designed to help you determine how much house you can realistically afford, based on your income, debts, and financial comfort level. It uses the well-known “28/36 Rule” for debt-to-income (DTI) ratios, a standard guideline used by mortgage lenders to assess borrower risk and affordability. Understanding this calculation can give you a clear, data-driven estimate before you start house hunting or applying for a home loan.

The 28/36 Rule Explained

The 28/36 Rule is a simple but powerful tool for managing housing costs and overall debt. It sets two key limits:

  • Front-End Ratio (28% Limit): This is the portion of your gross monthly income (before taxes and deductions) that can go toward your total housing expenses. These expenses typically include:
    • Principal and Interest (loan repayment)
    • Property Taxes
    • Homeowner’s Insurance
    • Private Mortgage Insurance (PMI), if applicable
    For example, if your gross monthly income is $5,000, your housing costs should not exceed $1,400 per month (28% of $5,000).
  • Back-End Ratio (36% Limit): This is the percentage of your gross monthly income that can go toward all of your debt obligations combined. This includes your housing costs (PITI) plus other debts such as:
    • Car loans or leases
    • Student loans
    • Credit card payments
    • Personal loans
    • Any other recurring monthly debt payments
    For the same $5,000 monthly income example, your total monthly debt payments should not exceed $1,800 (36% of $5,000).

Step-by-Step Calculation Process

  1. Calculate Front-End Limit: Multiply your gross monthly income by 28% to find the maximum monthly housing payment allowed by the front-end ratio.
  2. Calculate Back-End Limit: Multiply your gross monthly income by 36% to find the maximum total monthly debt payment allowed, then subtract your non-housing debts to determine the maximum housing payment allowed by the back-end ratio.
  3. Select the Lower Value: The calculator uses the more conservative (lower) result from steps 1 and 2 to ensure affordability.
  4. Determine Loan Amount: Using current mortgage interest rates and loan terms, the calculator works backward from your maximum affordable housing payment to determine the largest loan you can qualify for.
  5. Add Your Down Payment: Finally, the calculator adds your planned down payment to the loan amount to give you the total maximum affordable home price.

Why the 28/36 Rule Matters

Lenders use the 28/36 Rule because it helps ensure borrowers can comfortably manage mortgage payments without becoming financially overextended. Staying within these limits reduces your risk of default, helps maintain good credit, and leaves room in your budget for savings and emergencies.

Frequently Asked Questions (FAQs)

1. What does PITI mean?

PITI stands for Principal, Interest, Taxes, and Insurance. It represents the total monthly cost of owning a home (excluding utilities and maintenance). The calculator includes all of these components in its affordability estimate.

2. Does this calculator include HOA fees?

Homeowners Association (HOA) fees are not automatically included, but if applicable, they should be factored into your housing expenses as they directly impact your front-end ratio.

3. What if my debt-to-income ratio is higher than 36%?

Some lenders may approve borrowers with higher DTIs, especially if they have strong credit scores, large down payments, or stable income. However, exceeding 36% can limit your borrowing power and increase financial risk.

4. How accurate is this affordability estimate?

This calculator provides a reliable estimate based on standard lending guidelines. However, actual loan approvals may vary depending on lender policies, interest rates, credit score, and other financial factors.

5. Can I improve my affordability?

Yes. You can increase your affordability by paying down debt, boosting your income, saving for a larger down payment, or improving your credit score to qualify for better interest rates.

Use this mortgage affordability calculator as a starting point to guide your home-buying journey. By understanding the 28/36 Rule and your own financial limits, you can shop for a home confidently and avoid future financial stress.