How Much House Can I Afford? (Mortgage Affordability Calculator)
Estimate the maximum home price you can afford based on your income, debts, down payment, and interest rate. Uses the standard 28/36 rule.
What this calculates
Affordability is about more than the down payment. Lenders look at your gross income, existing debts, and the future mortgage payment together. This calculator uses the long-standing 28/36 rule — no more than 28 % of gross income on housing and 36 % on total debt — to estimate the maximum home price you could realistically qualify for and afford to live with.
Formula & how it works
Maximum monthly housing payment = min(0.28 × gross_monthly_income, 0.36 × gross_monthly_income − existing_monthly_debt). From that monthly payment we solve the standard mortgage formula backwards: P = M × ((1 + r)^n − 1) ÷ (r × (1 + r)^n) where r is monthly interest rate and n is total payments. Add the down payment to get the maximum home price. Property tax and insurance reduce how much of the payment goes toward principal and interest — we use a 25 % buffer here.
Worked example
Gross income $96,000/year ($8,000/mo), existing debts $400/mo, $40,000 down, 30-year loan at 6.5 %. Housing cap = 0.28 × 8000 = $2,240. Debt cap = 0.36 × 8000 − 400 = $2,480. Take the lower: $2,240. Reserve 25 % for tax+insurance → ~$1,680 for P&I. Solving backwards at 6.5 % for 30 years gives a loan of ~$265,000. Add the $40K down → maximum home price ≈ $305,000.
Frequently asked questions
What's the 28/36 rule?
An old underwriting guideline still used by many US lenders. Your monthly housing payment (PITI) should be at most 28 % of gross monthly income, and total monthly debt payments (housing + cars + cards + student loans) should be at most 36 %. Lenders may stretch these, especially for first-time buyers with FHA loans.
Does this include property tax and insurance?
It reserves a generic 25 % of the payment for tax + insurance + (possibly) PMI and HOA. Your actual escrow will vary — high-property-tax states like New Jersey and Texas will eat more, while no-tax states like New Hampshire eat less.
What if I have a lot of savings?
Strong reserves help with approval but don't change the income-based debt ratios. Some lenders allow reserves to offset weak income for 'asset depletion' qualification, but it's case-by-case.
Should I borrow the maximum?
Almost never. The 28/36 rule is an upper bound, not a target. Borrowing the maximum leaves no margin for emergencies, repairs, or income changes. Many financial planners suggest staying closer to 20–25 % of gross income on housing.
Sources
Disclaimer: An estimate, not a pre-approval. Actual qualification depends on credit score, employment history, and lender policies.