28%
Max housing expense ratio (front-end DTI)
36%
Max total debt ratio (back-end DTI)
43%
Max DTI for most conventional loans
3.5%
Minimum FHA down payment
The 28/36 rule
The 28/36 rule is the traditional guideline lenders use: your monthly housing cost (PITI) should not exceed 28% of gross monthly income, and your total monthly debt payments — housing plus car loans, student loans, credit cards — should not exceed 36% of gross income. The calculator finds the maximum home price that keeps you within both limits given your current debts and down payment.
Modern conforming and FHA loans often allow total DTI up to 43–50% with compensating factors like a large down payment or significant reserves. But qualifying for a loan and affording it comfortably are different thresholds. The 28/36 guideline targets the more conservative but financially healthier level.
How to use the home affordability calculator
- Enter your gross annual household income (combined if buying with a partner)
- Enter your monthly debt payments: car loan, student loan, minimum credit card payments
- Enter your planned down payment amount
- Select your state for property tax estimation
- Add an insurance estimate if you have one
- Review your maximum home price under the 28% and 36% thresholds
Key factors that affect your maximum
- Existing monthly debt payments — these directly compete with housing in the 36% calculation
- Down payment size — a larger down payment means a smaller loan and lower PITI
- Property tax rate — varies enormously by state and county, significantly affecting affordability
- Interest rate — a 1% rate increase on a $400,000 loan reduces buying power by roughly $40,000
- PMI — required below 20% down, it adds to your housing expense ratio
⚠️ Bank approval ≠ true affordability
Getting approved for a $600,000 mortgage doesn't mean a $600,000 home fits your budget. The lender's calculation uses gross income; your budget runs on net income after taxes. The bank doesn't know about your childcare costs, travel plans, or the car you want to buy next year.
Common mistakes to avoid
- Using gross income for personal budgeting instead of take-home pay
- Forgetting to include HOA fees in the housing expense ratio
- Not stress-testing at a 1–2% higher interest rate in case rates rise before closing
- Ignoring maintenance costs — budget 1–2% of home value per year for upkeep
- Buying at the maximum the calculator allows without any buffer for job changes or emergencies
Related calculators
Once you have your maximum price, use the Mortgage Calculator to see the exact monthly PITI breakdown. Check your Debt-to-Income Ratio Calculator to confirm your current debt picture before applying. And if you're on the fence about buying at all, the Rent vs. Buy Calculator compares the 30-year cost of both options.