Affordability

House Affordability Calculator

The 28/36 rule, applied to your real numbers. Income, debts, down payment, taxes, insurance, HOA — slide them and see your honest max home price.

How the house affordability calculator works

This calculator applies the 28/36 rule — the standard underwriting guideline used by most conventional mortgage lenders — to your actual numbers. You enter your gross household income, existing monthly debts, down payment, interest rate, and local housing costs. The calculator then tells you the most expensive home you can buy without violating either ratio. Whichever limit binds first is your real ceiling.

Most online affordability tools only compare your income to a mortgage payment. This one works with your full PITI — Principal, Interest, Taxes, and Insurance — plus HOA fees. That distinction matters more than people expect. A $300/month HOA at a 6.8% rate is equivalent to approximately $46,000 of additional home price. Property taxes at 1.5% on a $400,000 home add $500 per month. These costs can easily shift your affordability ceiling by $50,000–$100,000.

The calculator also shows three thresholds — conservative (25/33), moderate (28/36), and aggressive (31/43) — so you can see where you land across the range from financially comfortable to lender-maximum. The aggressive threshold reflects what many lenders will actually approve with compensating factors; it is not a recommendation.

The 28/36 rule

Front-end ratio = PITI / gross monthly income ≤ 28%
Back-end ratio  = (PITI + all debts) / gross monthly income ≤ 36%

The front-end ratio(also called the housing ratio) measures how much of your gross monthly income goes toward housing alone. It protects against being “house-poor” — technically able to make payments but unable to afford anything else. At 28%, a household earning $7,500/month can spend up to $2,100 on PITI.

The back-end ratio(or total debt-to-income ratio) includes every recurring monthly debt obligation: car loans, student loans, minimum credit card payments, personal loans, and the projected PITI on the new home. It ensures that buying a house doesn't push your total debt load to a level where one disruption — a job loss, a medical bill — causes a cascade. Modern underwriting sometimes approves borrowers up to 43% back-end DTI, but 36% leaves meaningful breathing room.

Worked example

Suppose a household earns $90,000/year ($7,500/month gross), has $400/month in existing debts (a car payment and minimum credit card payment), and has $50,000 saved for a down payment at a 6.8% interest rate.

The front-end cap sets the maximum PITI at $7,500 × 28% = $2,100/month. The back-end cap sets the maximum for all debts at $7,500 × 36% = $2,700/month — but $400 is already committed to other debts, leaving a maximum PITI of $2,700 − $400 = $2,300/month. The front-end ratio binds at $2,100.

At 6.8% over 30 years, a $2,100 PITI budget (assuming 1.2% property tax, $120/month insurance, no HOA, and no PMI) corresponds to a loan of roughly $285,000 — and with a $50,000 down payment, a maximum home price of approximately $335,000. Note: PMI would apply if the home price exceeds $250,000 (20% of $50,000 down = 20% of $250,000), which adds $75–$150/month and reduces the affordable price by $15,000–$25,000 depending on assumptions.

When to use this calculator

Before you start house hunting. Knowing your ceiling prevents you from falling in love with homes you cannot comfortably afford, and gives you a realistic search range.
After a raise or change in income. Your affordable price changes significantly with income — recalculate whenever your financial picture shifts.
Stress-testing for a single income. Run the calculator with only one partner's income to see whether you could cover the mortgage if one of you lost a job or took parental leave.
Comparing markets. Enter different property tax rates and insurance estimates to compare affordability across cities or states with different cost structures.
Deciding how much to put down. Model a 10% vs. 20% down payment to see the impact of PMI elimination and lower monthly payments against the cost of using more of your savings.

Key concepts

DTI ratio (Debt-to-Income): Your total monthly debt obligations divided by your gross monthly income, expressed as a percentage. Lenders calculate both a front-end DTI (housing only) and a back-end DTI (all debts). Lower is better — most conventional loans target a back-end DTI below 36%.
PITI: Principal, Interest, Taxes, and Insurance — the four components of a full monthly mortgage payment. This is the figure used in the front-end DTI calculation, not just the principal and interest portion. HOA fees are often added alongside PITI by lenders.
PMI (Private Mortgage Insurance): Required on conventional loans when your down payment is less than 20% of the purchase price. PMI typically costs 0.5–1.5% of the loan amount per year ($100–$250/month on a $250,000 loan). It protects the lender, not you — and it directly reduces your affordable price by raising monthly PITI. It cancels automatically once you reach 20% equity.
Front-end vs. back-end ratio: The front-end ratio compares housing costs only to income; the back-end compares all debts to income. Both must pass independently. See how amortization works to understand how interest and principal change over the life of the loan.

Common mistakes

Forgetting PMI. If your down payment is less than 20%, PMI adds $100–$250/month or more — which can reduce what you can afford by $20,000–$40,000. Always model it.
Underestimating maintenance. Budget 1–2% of the home's value per year for maintenance and repairs. On a $350,000 home that is $3,500–$7,000 annually, or $290–$580/month, none of which shows up in the affordability ratio but all of which comes out of your budget.
Not stress-testing for income loss. Qualifying on two incomes and then having one disappear — due to layoff, illness, or a career change — is one of the most common causes of mortgage default. Always check whether you could survive on one income for 6–12 months.
Maxing affordability with no emergency fund. Buying at exactly your calculator maximum often means draining savings for the down payment. Without 3–6 months of expenses in reserve, a single surprise repair or income disruption can become a financial crisis.
Ignoring closing costs. Closing costs typically run 2–5% of the purchase price — $8,000–$20,000 on a $400,000 home. These are due at closing, on top of the down payment. Failing to budget for them can force last-minute borrowing or derail a purchase entirely.

Frequently asked questions

What is the 28/36 rule and why do lenders use it?

The 28/36 rule is a two-part guideline: your monthly housing costs (PITI) should not exceed 28% of your gross monthly income, and your total monthly debt obligations should not exceed 36%. Lenders developed these thresholds from decades of default data — borrowers who stay within these ratios default at significantly lower rates. The 28% front-end cap prevents “house-poor” situations where someone can technically make payments but cannot afford anything else; the 36% back-end cap ensures that adding a mortgage to existing debts doesn't overwhelm the overall budget.

Should PITI include HOA fees?

Yes — most lenders include HOA fees alongside PITI when calculating your front-end ratio. This means a $400/month HOA effectively raises your housing cost and reduces the mortgage payment you qualify for by the same $400. When comparing homes with and without HOAs, always add the HOA back into the monthly housing cost to make a true apples-to-apples affordability comparison.

How does student loan debt affect home affordability?

Student loans are counted in your back-end DTI. Even income-driven repayment (IDR) plans with temporarily low or $0 payments can be counted at 0.5–1% of the outstanding balance by some lenders. For example, $80,000 in student debt could be counted as $400–$800/month, reducing the back-end ratio budget available for housing. Paying down high-balance student loans or refinancing to lower monthly payments before buying can meaningfully increase your maximum home price.

How large an emergency fund should I have before buying?

Most financial planners recommend having 3–6 months of total living expenses (not just the mortgage) in a liquid savings account after closing — meaning after paying the down payment and closing costs. Homeownership introduces unpredictable expenses: HVAC systems, roofing, plumbing, and appliances all fail eventually. Without reserves, a $6,000 furnace replacement can force you to put essential repairs on credit cards at high interest, eroding the financial position homeownership was meant to build.

Is it better to stretch your budget or buy conservatively?

Buying conservatively — below your maximum affordability — gives you resilience. You can absorb a job loss, handle a major repair, continue saving for retirement, and avoid financial stress. Stretching to your lender's maximum leaves no margin for error and often means sacrificing retirement contributions and other savings. A practical approach: treat the calculator's output as a ceiling, then aim for a home priced 10–20% below that ceiling to preserve optionality and financial breathing room.

How does down payment size affect what I can afford?

A larger down payment reduces the loan balance, which lowers the principal and interest component of your PITI — potentially allowing you to qualify for a higher-priced home within the same monthly budget. Crucially, reaching 20% down eliminates PMI, saving $100–$250/month or more and adding $15,000–$40,000 to your affordable price. However, putting all available savings into a down payment leaves you without an emergency fund — so the right balance depends on your cash reserves, the PMI cost, and how long you plan to stay in the home.

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This tool is for educational purposes only and does not constitute financial advice. Affordability estimates are based on standard underwriting guidelines and may differ from what a lender will approve in your specific situation. Consult a licensed mortgage professional before making a home purchase decision.