How much house can I afford?
This calculator uses the 28/36 rule that many lenders apply. Your housing payment should stay at or below 28% of gross monthly income, and all debt payments together at or below 36%. The lower of the two limits sets your maximum payment, which is then turned into a home price using your down payment, rate and term.
The formula
Maximum housing payment = the lower of (income × 28%) and (income × 36% − other monthly debts)
Worked example
With $8,000 of gross monthly income and $500 of other debts, the 28% limit is $2,240 and the 36% limit is $2,880 − $500 = $2,380. The maximum housing payment is $2,240, including tax and insurance.
How to use this calculator
Enter your household income before taxes and the total of your monthly debt payments. Then add the down payment you have saved, an interest rate, a loan term, the property tax rate and home insurance. The housing ratio limit and total debt ratio limit follow the 28/36 rule, and you can change them if your lender uses different limits. The result shows the home price you can afford, the maximum monthly housing payment and the loan amount, so treat it as a ceiling and not a target.
From maximum payment to home price
The $2,240 limit in the example has to cover property tax and home insurance as well as the loan. Suppose those two cost $500 a month. That leaves $1,740 for principal and interest.
At an example rate of 6.5% over 30 years, $1,740 a month supports a loan of about $275,300. Add a $60,000 down payment and the home price comes to about $335,300. At 7% the same $1,740 supports about $261,500, and at 6% about $290,200, so the rate you qualify for matters as much as your income.
More examples: how other debts change the limit
These rows keep the $8,000 gross monthly income and change only the other debts.
| Other monthly debts | 28% limit | 36% limit minus debts | Maximum housing payment |
|---|---|---|---|
| $500 | $2,240 | $2,380 | $2,240 |
| $1,000 | $2,240 | $1,880 | $1,880 |
| $1,500 | $2,240 | $1,380 | $1,380 |
On this income, the 28% limit decides until other debts pass $640 a month. Above that, every extra dollar of debt takes a dollar off the housing payment.
What the result means
The 28/36 guideline is a rule of thumb, not a lending rule. A total debt-to-income ratio of 36% or lower is considered strong. Many conventional loans allow up to 45%, and some up to 50%, so a lender may approve more than this calculator shows. Approval and comfort are different things. Check the payment against your real budget, including savings, childcare and other costs a lender does not count.
What changes the result
- Income: each extra $1,000 of gross monthly income raises the 28% limit by $280.
- Other debts: paying off a car loan or a credit card can raise the limit once the 36% test is the one that binds.
- Interest rate: a lower rate lets the same payment support a larger loan.
- Down payment: it is added on top of the loan, so more cash down raises the price directly.
- Tax and insurance: higher costs leave less of the payment for the loan itself.
Common mistakes
- Entering take-home pay instead of gross income.
- Leaving out a debt, such as a student loan or a credit card minimum.
- Forgetting that the housing payment includes tax and insurance.
- Shopping at the very top of the range with no room for repairs or a change in income.
- Ignoring closing costs, which commonly run 2% to 5% of the loan.
Related calculators
Check your ratios with the DTI calculator, price a specific home with the mortgage calculator, and plan your savings with the down payment calculator.
Frequently asked questions
What is the 28/36 rule?
A lending guideline: spend no more than 28% of gross income on housing and no more than 36% on all debts.
Does a larger down payment raise what I can afford?
Yes. The payment limit sets the loan size, and the down payment is added on top of the loan.
What else do lenders check?
Credit score, employment history, savings and the property itself. Some loan programs allow debt ratios above 36%.
Does the 28/36 rule use gross or net income?
Gross income, which is your pay before taxes and deductions. Because of that, the limit can feel tight once taxes come out, so compare the payment with your take-home pay as well.
What counts as other monthly debts?
Regular payments you owe each month, such as car loans, student loans, personal loans and credit card minimums. Everyday bills such as groceries and utilities are not included.
Can I get a mortgage with a debt ratio above 36%?
Often, yes. Many conventional loans allow a total debt-to-income ratio of up to 45%, and some up to 50%. Your lender sets the limit based on your full application.
How does the interest rate change how much house I can afford?
A higher rate means the same monthly payment supports a smaller loan. In the example above, $1,740 a month supports about $290,200 at 6% but only about $261,500 at 7%.