House Affordability Calculator
How much house you can afford from income, debts, down payment, and rate.
What it does
Lenders size mortgages with two ratios. The front ratio caps housing costs at 28% of gross monthly income. The back ratio caps housing plus all monthly debts at 36%. The smaller allowance sets the budget, which protects borrowers from the larger of the two risks.
The tool above runs both caps from income and debts, subtracts tax and insurance, and converts the remaining principal and interest budget into a loan and a price at your rate, term, and down payment.
These are qualification ceilings, not comfort levels. Childcare, variable income, and thin savings argue for buying below the max. A budget that survives one income dip beats a maxed approval every time.
Down payment moves the price more than rate shopping. Twenty percent down avoids mortgage insurance and lifts the price by a quarter against the same loan, while each rate point moves it roughly a tenth.
How to use
- Enter household gross yearly income before tax.
- Enter monthly debts: car, student, and card minimums.
- Enter down payment percent, rate, and term.
- Estimate monthly tax plus insurance for your area.
- Shop at or below the max price, never above it.
Formula
- 28% front ratio
- Housing share of gross monthly income.
- 36% back ratio
- Housing plus all debts share of income.
- r, n
- Monthly rate and payment count, as in the mortgage formula.
- 1 - down
- Loan share of the price. 20% down means the loan covers 80%.
The loan factor inverts the mortgage payment formula: instead of payment from principal, it gives principal from payment. At 6.5% over 30 years each dollar of monthly P&I supports about $158 of loan.
Worked example
Example: $100,000 income, $500 debts, 20% down, 6.5%, 30 years
Income 100,000, debts 500 a month, tax plus insurance 300 a month.
- Monthly income: 100,000 / 12 = $8,333.33.
- Front cap: 8,333.33 x 0.28 = $2,333.33.
- Back cap: 8,333.33 x 0.36 - 500 = $2,500.00.
- Budget: lower is $2,333.33 a month.
- P&I budget: 2,333.33 - 300 = $2,033.33.
- Loan factor at 6.5% over 360 months: 158.21.
- Loan: 2,033.33 x 158.21 = $321,695. Price: 321,695 / 0.80 = $402,119. Down: $80,424.
Reference table
| Income | Monthly budget | Max price |
|---|---|---|
| $60,000 | $1,400 | about $218,000 |
| $80,000 | $1,867 | about $310,000 |
| $100,000 | $2,333 | about $402,000 |
| $150,000 | $3,500 | about $633,000 |
Limits
- Qualification math, not comfort math. Life costs sit outside ratios.
- Ignores HOA dues unless added to tax and insurance.
- Rates move. A locked rate decides, not today quote.
- Self employed income averages differently at underwriting.
Common mistakes
- Shopping the max approval instead of the survivable payment.
- Forgetting tax and insurance, which run hundreds monthly.
- Counting overtime and bonuses lenders average down.
- Opening new credit before closing, which resets approval.
- Skipping the emergency fund to stretch the down payment.
Try it yourself
Quick checks. Answers sit tucked under each question.
Income $120,000, no debts. Monthly budget?
10,000 x 0.28 = $2,800. Back cap is 3,600, so $2,800 wins.
Same income with $1,000 monthly debts?
Back cap: 3,600 - 1,000 = $2,600, which beats the $2,800 front cap. Budget $2,600.
Questions
What is the 28/36 rule?
Housing under 28% of gross monthly income, and housing plus debts under 36%. Lenders use both; the lower governs.
Is 20% down required?
No, but it avoids mortgage insurance and lowers the payment. Low down payment loans exist with insurance added.
Do lenders count all debts?
Minimum payments on cards, cars, student loans, and similar. Utilities and subscriptions stay out.
How does rate change affordability?
Each point moves the loan roughly a tenth. From 6.5% to 7.5% costs about 10% of price.
Should I buy the max?
Usually not. Repairs, kids, and income dips fit badly at the ceiling. Leave margin.
What about HOA dues?
Add them to the tax and insurance line. Lenders count them in housing cost.