Home Affordability Calculator
Estimate a conservative home price using income, monthly debts, down payment, mortgage rate, term, and common 28/36 debt-to-income rules.
| Rule | Payment cap | Max price |
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How We Calculate This
Formula
Variables
- Income is annual gross income.
- Monthly debts are existing recurring obligations.
- Down payment is added to the loan capacity to estimate price.
Sources CFPB ability-to-repay concepts and common 28/36 mortgage qualification guidelines.
How to Use the Affordability Results
Home affordability starts with payment capacity, not the listing price. Lenders compare housing cost with income and then compare all debt payments with income. This calculator uses the familiar 28/36 framework: housing payment near 28% of gross monthly income and total debt payments near 36%. It converts the tighter payment cap into a maximum loan amount, then adds your down payment to estimate a purchase price.
The key variables are income, monthly debts, down payment, rate, and term. Income is annual gross income before taxes. Monthly debts include auto loans, student loans, credit cards, personal loans, and other recurring obligations. Down payment reduces the amount you need to borrow. Rate and term determine how much principal a given monthly payment can support. A higher rate or shorter term lowers the maximum price.
Interpret the result as a starting ceiling. The 28% rule shows what your income can support for housing alone. The 36% rule shows what is left after existing debts. The lower of the two is the conservative price because both constraints matter in underwriting. If the back-end DTI rule is binding, paying down debt may improve buying power more than saving a slightly larger down payment.
This calculator intentionally focuses on the requested inputs, so the next step is adding ownership costs. Property taxes, homeowners insurance, PMI, HOA dues, repairs, and reserves can move the answer materially. Run the mortgage calculator after this tool to model the full PITI payment. The first-time home buyer guide explains why the lender-approved number can still be too aggressive for a household budget.
Use the result with a personal comfort test. A mortgage that fits a DTI formula may still crowd out retirement savings, childcare, travel, repairs, or emergency reserves. Try the calculation with a lower income, a higher rate, or a smaller down payment to see how fragile the plan is. A good affordability target leaves room to own the home after closing, not just qualify for it.
Affordability also changes with credit score and loan type. FHA, VA, jumbo, and conventional loans can apply different DTI tolerances, reserve requirements, mortgage insurance rules, and down-payment minimums. A borrower with strong reserves may qualify above a simple 28/36 screen, while a borrower with unstable income may want to stay below it. Treat lender approval as a maximum, not a recommendation to spend every available dollar each month.
Frequently Asked Questions
What are the 28/36 affordability rules?
The 28% rule caps housing payment at 28% of gross monthly income. The 36% rule caps total debt payments, including housing, at 36%.
Does the calculator include taxes and insurance?
No. It uses the required inputs and estimates principal and interest capacity. Add taxes, insurance, HOA, and PMI in the mortgage calculator.
Should I use gross or net income?
Lenders usually start with gross income, but your personal budget should also consider take-home pay and savings goals.
Why is my max price limited by debts?
Existing monthly debts reduce the payment room available under the 36% back-end DTI rule.