Ad placeholder — leaderboard
Home Affordability Calculator
Determine how much house you can afford based on your income, monthly debts, and down payment using the 28/36 rule.
Ad placeholder — in-article
Max Home Price
Max Loan Amount
Max Monthly Payment
Monthly Principal & Interest
Calculated in your browser. We never see your numbers.
How to Use This Calculator
Enter your gross annual income (before taxes), total monthly debt payments (car loans, student loans, credit cards), and the down payment you plan to make. Then set your expected interest rate, loan term, local property tax rate, and homeowner's insurance rate. Click Calculate to see your maximum affordable home price, maximum loan amount, and estimated monthly payment breakdown. Adjust any input to instantly see how it affects your home-buying budget.
Home Affordability Formula (28/36 Rule)
Lenders use the 28/36 rule to evaluate your ability to afford a mortgage. Your maximum monthly housing budget is the lesser of: (1) 28% of gross monthly income, or (2) 36% of gross monthly income minus all monthly debts. Once the maximum monthly housing payment is known, this calculator solves algebraically for the home price where principal & interest + property tax + homeowner's insurance exactly equals that limit. The formula is: Max Home Price = (Max Monthly Housing + Down Payment × Payment Factor) ÷ (Payment Factor + Monthly Rate for Tax & Insurance), where the Payment Factor is the standard mortgage amortization factor r(1+r)ⁿ / ((1+r)ⁿ − 1).
Example Calculation
Suppose you earn $100,000/year, have $500/month in other debts, a $25,000 down payment, a 7% interest rate, and a 30-year term. Your gross monthly income is $8,333. The 28% housing limit gives $2,333/month. The 36% total debt limit gives $3,000 − $500 = $2,500/month. The binding constraint is $2,333. Using a payment factor of 0.006653 for 7%/30yr, and a combined tax+insurance rate of 1.7%/12 per month, the calculator solves: Max Price ≈ ($2,333 + $25,000 × 0.006653) / (0.006653 + 0.00142) ≈ $297,000. Your max loan would be about $272,000 with a ~$1,810/month P&I payment.
Tips to Increase Your Home-Buying Budget
Several strategies can meaningfully raise your maximum affordable home price. Pay down existing debts before applying — eliminating $500/month in car payments can add $60,000+ to your maximum home price. Save a larger down payment to reduce the loan needed and potentially eliminate PMI. Improve your credit score to qualify for lower interest rates — each 0.5% rate reduction significantly increases purchasing power. Consider a longer loan term (30 vs. 15 years) to lower monthly payments, though you'll pay more interest over time. Finally, shop for homes in lower property tax areas — local tax rates vary dramatically and directly affect your monthly housing cost.
Ad placeholder — rectangle
Frequently Asked Questions
How much house can I afford on my salary?
A common rule of thumb is to spend no more than 28% of your gross monthly income on housing costs (principal, interest, taxes, and insurance). For a $80,000 annual salary, that means a maximum of about $1,867/month for housing. Using a 7% interest rate on a 30-year mortgage, that translates to roughly a $250,000–$280,000 home depending on your down payment and local property taxes.
What is the 28/36 rule for home affordability?
The 28/36 rule is a guideline used by lenders to evaluate mortgage applications. It states that your monthly housing costs should not exceed 28% of your gross monthly income, and your total debt payments (housing plus all other debts like car loans, student loans, credit cards) should not exceed 36% of your gross monthly income. This calculator applies both limits and uses the more conservative result.
What debts should I include in the monthly debts field?
Include all recurring monthly debt obligations: minimum credit card payments, car loan payments, student loan payments, personal loan payments, and any other installment debt. Do not include utility bills, groceries, subscriptions, or current rent (since rent is replaced by the mortgage). The goal is to capture your non-housing debt burden so the 36% total debt limit can be accurately applied.
How does the down payment affect how much house I can afford?
A larger down payment increases your maximum home price in two ways. First, it directly reduces the loan amount you need, which lowers your monthly principal and interest payment. Second, because the algebraic formula solves for the home price where your total monthly payment (P&I + taxes + insurance) equals your budget limit, a higher down payment shifts that limit upward. Putting 20% down also typically eliminates the need for private mortgage insurance (PMI), further reducing your monthly costs.
What property tax and insurance rates should I use?
This calculator defaults to 1.2% annual property tax and 0.5% annual homeowner's insurance, which are reasonable national averages in the United States. However, property taxes vary widely by state and county — from under 0.5% in Hawaii to over 2% in New Jersey. Check your target area's actual property tax rate for the most accurate result. Homeowner's insurance typically ranges from 0.25% to 1% of home value annually.
Ad placeholder — leaderboard