🏡 Home Affordability
Find the maximum home price you can afford from your income, existing debts and down payment, using lenders’ 28/36 debt-to-income rule.
Quick answer: With a $100,000 salary, $500 of monthly debts and $60,000 down, the 28/36 rule caps housing at $2,333.33 a month, which buys a home of about $353,460 at a 6.5% 30-year rate with 1.2% property tax and $1,500 a year insurance.
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Home Affordability inputs
Result
You can afford a home up to
$353,460
with $60,000 down – limited by the 28% housing rule
| Principal & interest | $1,854.87 |
| Property tax | $353.46 |
| Home insurance | $125.00 |
| Max monthly housing payment | $2,333.33 |
- Loan amount
- $293,460
- 28% housing limit
- $2,333.33
- 36% DTI limit (after debts)
- $2,500.00
Affordable price at different mortgage rates
| Rate | Max home price |
|---|---|
| 5% | $397,352 |
| 5.5% | $381,708 |
| 6% | $367,101 |
| 6.5% | $353,460 |
| 7% | $340,716 |
| 7.5% | $328,805 |
| 8% | $317,666 |
How home affordability is calculated
Lenders look at two debt-to-income ratios. The front-end ratio limits your housing payment to 28% of gross monthly income. The back-end ratio limits housing plus all other debts to 36%. Your housing budget is the smaller of the two.
Budget = min(Income ÷ 12 × 28%, Income ÷ 12 × 36% − Debts)
The calculator then finds the price where principal and interest on (price − down payment), plus monthly property tax and insurance, exactly equal that budget.
Worked example
A household earning $100,000 a year has gross income of $8,333.33 a month. 28% of that is $2,333.33; 36% minus $500 of debts is $2,500, so the housing budget is $2,333.33. With $60,000 down, a 6.5% 30-year mortgage, 1.2% property tax and $1,500 a year insurance, the maximum price is about $353,460 – a loan of $293,460 with principal and interest of $1,854.87.
Common DTI limits
| Guideline | Housing | Total debt |
|---|---|---|
| Classic conservative rule | 28% | 36% |
| Conventional (typical max) | – | 43–45% |
| FHA | 31% | 43% (higher with strong compensating factors) |
Tips before you shop
- Paying off a car loan or card balance raises the back-end limit dollar for dollar.
- Budget separately for closing costs (2–5% of the price), moving and maintenance.
- Just because a lender approves an amount doesn't mean it fits your other goals – leave room for saving.
Why the down payment matters
Every extra dollar of down payment adds a dollar to the price you can afford without changing the monthly payment. Putting 20% or more down also avoids private mortgage insurance on a conventional loan.
Estimates for educational purposes, not financial advice.
Frequently asked questions
What is the 28/36 rule?
Lenders like your housing costs (mortgage, property tax, insurance) to stay under 28% of gross monthly income, and all debt payments including housing under 36%. The lower of the two limits sets your budget.
Can I borrow more than the 28/36 rule allows?
Often yes – many conventional loans accept a total DTI up to 43–45%, and FHA loans sometimes go to 50%. Raise the limits in the advanced section to see the effect, but a bigger loan also means a tighter monthly budget.
Does this include PMI or HOA fees?
No. If you put less than 20% down, add PMI, and add any HOA fees, by lowering the housing ratio slightly or using our mortgage calculator for the full payment.
How does the interest rate change what I can afford?
Each 1 percentage point increase in the rate cuts your buying power by roughly 10%. The table under the result shows your maximum price at a range of rates.