Mortgage Affordability Calculator

How the Affordability Calculator Works

Our mortgage affordability calculator uses the 28/36 rule — a common guideline lenders use to determine how much home you can afford. It factors in your annual income, existing monthly debts, down payment, interest rate, loan term, property taxes, and home insurance to estimate the maximum home price you can reasonably afford.

The 28/36 Rule

The 28/36 rule is a standard guideline used by mortgage lenders:

• 28% (Front-End Ratio): Your total monthly housing payment — including principal, interest, property taxes, and insurance (PITI) — should not exceed 28% of your gross monthly income.
• 36% (Back-End Ratio): Your total monthly debt payments — including your mortgage payment plus credit cards, car loans, student loans, and other debts — should not exceed 36% of your gross monthly income.

How Maximum Home Price Is Calculated

The calculator determines the maximum monthly payment allowed by both the 28% front-end and 36% back-end rules, then uses the lower of the two. From that maximum payment, it works backward through the mortgage formula to find the maximum loan amount, and adds your down payment to get the maximum home price:

Max PITI = min(28% × Monthly Income, 36% × Monthly Income − Monthly Debts)
Max Loan = Max PITI converted via amortization formula
Max Home Price = Max Loan + Down Payment

What Is Included in PITI?

• P — Principal: The portion of your payment that reduces your loan balance.
• I — Interest: The cost of borrowing, based on your rate and remaining balance.
• T — Taxes: Property taxes, estimated from the home price and your local tax rate.
• I — Insurance: Homeowners insurance premiums, divided monthly.

Note: This calculator does not include PMI, HOA fees, or utilities. If your down payment is less than 20%, you'll likely need PMI, which reduces what you can afford.

Tips to Afford More House

• Increase your down payment to reduce the loan amount and eliminate PMI.
• Pay down existing debts to lower your back-end DTI ratio.
• Improve your credit score to qualify for a lower interest rate.
• Consider a longer loan term for lower monthly payments (but more total interest).
• Increase your income through a raise, side job, or co-borrower.

Example: Calculating Affordability

Suppose you earn $90,000 per year ($7,500 per month), have $400 in monthly debt payments, a $40,000 down payment, and a 6.5% interest rate on a 30-year loan. The 28% front-end rule caps your housing payment at $2,100 per month. The 36% back-end rule caps your total debt at $2,700, so your housing portion is $2,700 minus $400 in existing debts, or $2,300. The calculator uses the lower limit of $2,100 as your maximum PITI. After accounting for property taxes and insurance, it works backward through the mortgage formula to find the maximum loan amount, then adds your down payment to determine the maximum home price you can afford.

What This Calculator Does Not Include

Real homeownership costs extend beyond PITI. This calculator does not account for several expenses that can affect affordability:

• PMI (Private Mortgage Insurance): Required if your down payment is under 20%, typically costing $50–$200+ per month.
• HOA fees: Homeowners association dues can add hundreds per month in some communities.
• Utilities: Electricity, water, gas, internet, and trash collection vary by location and home size.
• Maintenance and repairs: Budget roughly 1% of the home's value annually for upkeep.
• Closing costs: Typically 2–5% of the loan amount, due at signing.
• Property tax increases: Taxes can rise over time as property values appreciate.

Factoring these into your budget gives you a more realistic picture of what you can truly afford month to month.

How Your Down Payment Affects Affordability

Your down payment has a compounding effect on affordability. A larger down payment reduces the loan amount, which lowers your monthly principal and interest payment. It can also eliminate PMI if you reach the 20% threshold, freeing up more of your monthly budget for the mortgage itself. For example, increasing a down payment from $40,000 to $80,000 on a $400,000 home reduces the loan by $40,000, which can lower your monthly payment by hundreds of dollars and may push you past the 20% equity mark to remove PMI entirely. Use the calculator to compare scenarios with different down payment amounts.

Front-End vs. Back-End DTI: Which Matters More?

Lenders look at both ratios, but the back-end DTI often acts as the binding constraint. If you carry significant existing debt — student loans, car payments, or credit card balances — your back-end ratio may limit your housing payment well below the 28% front-end cap. This is why paying down debt before applying for a mortgage can increase your buying power more effectively than saving for a larger down payment. Conversely, borrowers with little existing debt may find the 28% front-end rule is the limiting factor. This calculator automatically uses the more restrictive of the two ratios to give you a conservative estimate.