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How to use it
- Use household income before tax, and add up the monthly payments on your car, student loans, credit card minimums and any other debts.
- Enter the cash you have for a down payment, the mortgage rate you have been quoted, and whether you are looking at a 15, 20 or 30 year term.
- Start with the 28/36 guideline for a comfortable figure, then compare it against 43%, 45% and 50% to see the full range a lender might allow.
- Open the taxes and insurance box to match your county’s property tax rate, then read the table showing what would raise or lower your maximum price most.
How is the maximum home price calculated?
The monthly budget is the smaller of two limits: the debt limit’s share of gross income minus the debts already paid and, for the 28/36 guideline, 28% of gross income for housing alone. Property tax and mortgage insurance depend on the price, so the price that exactly uses the budget is found by repeated halving. The payment is principal and interest (standard amortisation), property tax, insurance, HOA dues and mortgage insurance, charged when the deposit is under 20%. Cash at closing is the deposit plus 3% of the price for closing costs.
For example, $72,000 a year is $6,000 a month. Under the 28/36 guideline, 36% of that is $2,160, and after $680 of other debt payments $1,480 is left for housing. With $40,000 down at 6.5% over 30 years, the largest price that fits is $208,975: $1,068 of principal and interest, $191.56 of property tax, $150.00 of insurance and $70.41 of mortgage insurance, $1,480 in all. Clearing a $380 car payment would raise the price by $26,130. The figures are made up; yours come from what you type.
Who should use it
- First-time buyers working out a realistic price range
- Buyers deciding how much deposit or debt reduction would matter most
- Anyone comparing a 15-year and a 30-year mortgage
- People checking what a lender’s maximum means for their monthly budget
Who should not use this
- Anyone who needs a pre-approval; only a lender can give one
- Buyers in areas with unusual property tax or insurance costs who have not changed those defaults
- Anyone using a government-backed loan with its own rules, who should check that programme’s limits
Limitations
- Tax, insurance and mortgage-insurance rates are assumptions; replace them with real quotes.
- Closing costs are estimated at 3% of the price; they commonly run 2% to 5%.
- It does not model credit score, reserves, income history or loan type, which lenders also weigh.
- The rate is fixed for the whole term; adjustable-rate loans can change.
- Nothing is uploaded or stored on a server. Clearing your browser data also removes the saved profile.
How much house can I afford on my income?
A lender answers this backwards from the way buyers do. You start with a house and ask whether you can pay for it. The lender starts with your income, decides what monthly payment it will allow, and works out what price that payment buys. The calculator above does it the lender’s way, because that is the answer that decides whether you get the loan.
There are two limits, and the smaller one wins.
- A share of your income for housing alone, often 28%.
- A share of your income for all your debts together, including the new mortgage. This is where your car loan and student loans come in.
Housing limit at 28%: $1,680 a month. Total debt limit at 36%: $2,160, less the $680 already committed, leaves $1,480.
So $1,480 is the budget, and at 6.5% over thirty years it buys a house of about $208,975.
Notice which limit bound them. Their housing allowance was $1,680, but their existing debts pulled the real figure down to $1,480. For most buyers, it is the second limit that decides the answer, not the first.
Mortgage affordability calculator: how the sum actually works
Working out the payment from a price is easy. Working out the price from a payment is harder, because two of the costs depend on the price you have not chosen yet. Property tax is a percentage of the value, and mortgage insurance is a percentage of the loan. The calculator closes in on the answer by trying prices until the monthly cost matches the budget exactly.
Here is what that $1,480 is actually spent on at a price of $208,975:
| Part of the payment | Per month | Share |
|---|---|---|
| Principal and interest | $1,068 | 72% |
| Property tax | $192 | 13% |
| Home insurance | $150 | 10% |
| Mortgage insurance | $70 | 5% |
| Total | $1,480 | 100% |
Only about seven dollars in every ten goes on the mortgage itself. This is the gap that catches people out: they take the monthly figure from a rate advert, which quotes principal and interest only, and budget for that. The real payment is roughly a third higher before anyone has turned a light on.
The 28/36 rule, and how much you can afford for a house
The 28/36 rule says your housing payment should stay under 28% of gross income and all your debt payments under 36%. It is worth being precise about its status: it is a long-standing lending guideline, not a published rule and not a law. Plenty of approved mortgages sit well outside it.
What it is, is a reasonable place to aim. The published limits that do exist are higher, and they stack up like this for our household on $6,000 a month:
| Limit | Monthly budget | Maximum price | What it is |
|---|---|---|---|
| 28/36 guideline | $1,480 | $208,975 | A guideline, and a comfortable one |
| 43% | $1,900 | $263,848 | The old qualified-mortgage ceiling, still used as an internal guideline |
| 45% | $2,020 | $279,526 | Fannie Mae manual underwriting, with credit score and reserves |
| 50% | $2,320 | $318,721 | Fannie Mae’s maximum through Desktop Underwriter |
That is a $110,000 spread on identical income, purely from which limit you lean on. Which is the honest reason this question has no single answer, and why two lenders can tell the same buyer very different things.
It is also worth knowing that the 43% figure is widely misreported as a legal maximum. The CFPB removed that cap and replaced it with a price-based test, mandatory from 1 October 2022. It persists as a habit, not a rule.
Home loan: how much can I afford once my debts are counted?
This is where the answer moves most, and where buyers have the most control.
Every $100 a month of debt payments you clear is worth roughly $13,000 more house to this household. Not because the debt was large, but because the ratio only looks at monthly payments, and freeing up a payment hands the whole amount to the mortgage.
Saving another $10,000 for the deposit raises it to $227,436, which is $18,462 more house.
So paying off the car is worth more than finding another ten thousand dollars of cash, and for most people it is the easier of the two.
This cuts both ways, and badly. Financing a car in the months before a mortgage application can take tens of thousands off what you are able to borrow. Buyers often do not see the connection until the loan officer explains it. If you are buying in the next year, do not take on a new monthly payment for anything.
What moves the number most
The table in the calculator runs each of these for your own figures. For the household above, in order of effect:
| Change | New maximum | Difference |
|---|---|---|
| A 15-year mortgage instead of 30 | $174,334 | −$34,640 |
| Clear $380 a month of debt | $235,105 | +$26,130 |
| Income up $5,000 a year | $228,572 | +$19,598 |
| Another $10,000 of deposit | $227,436 | +$18,462 |
| Rate one point lower, 5.50% | $224,466 | +$15,492 |
| Rate one point higher, 7.50% | $200,000 | −$8,975 |
Two of those deserve a word.
The 15-year mortgage costs you the most borrowing power by a wide margin, because the payments are so much higher. It also saves an enormous amount of interest. Both things are true: a shorter term is usually the better financial decision and always the smaller house.
The rate one point higher row lands on a suspiciously round $200,000, and that is not a rounding artefact. At that price, a $40,000 deposit is exactly 20%, so mortgage insurance disappears. Dropping below the 20% line removes about $67 a month from the payment, which holds the affordable price steady right at that point. The 20% deposit threshold is a real cliff edge, and if you are near it, getting over it is worth more than it first appears.
The costs people leave out
The calculator covers the monthly payment. These are the ones that arrive separately, and they are the reason buyers who qualify comfortably still feel stretched in year one.
- Closing costs, commonly 2% to 5% of the price. On a $208,975 house at 3%, that is about $6,269 on top of the deposit, so the cash you actually need at closing is nearer $46,269 than $40,000.
- Maintenance. A rough planning figure is 1% of the value a year, which here is about $174 a month that never appears on any mortgage statement. Some years it is nothing; the year the roof goes, it is not.
- Moving in. Appliances, a mower, curtains, the thing that turns out to be broken. Budget for it rather than putting it on a card, because that card payment then follows you into the next ratio you are measured on.
- Property tax rises. Your tax is a percentage of an assessed value that gets reassessed. The payment you sign up for is not fixed for thirty years even on a fixed-rate loan.
What a lender allows is not what you can live on
This is worth ending on, because it is the part a calculator is worst at.
Everything on this page answers one question: what will an underwriter permit? The 50% row is a real option that real lenders really approve. It is also a household handing over half of its gross income to debt, before tax, before groceries, before childcare, before anything goes into savings.
The ratios know nothing about your life. They do not know you are about to have a second child, that your commute would double, that your job is stable or that it is not. They were designed to predict whether the bank gets repaid, which is a narrower question than whether you will be comfortable.
My own suggestion, for what it is worth: find the maximum with this page, then work out what the payment would be at a price well below it, and ask whether you could still save at that number. If the answer is no, the house is too expensive, whatever the underwriter says. Being approved for a mortgage and being able to afford it are two different findings, and only one of them is made by a lender.
Sources and review
Reviewed on 23 Oct 2026 against the published sources below. Rules and prices change, so check the current position before you rely on a figure.
- Consumer Financial Protection Bureau: What is a debt-to-income ratio?
- Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios
- Consumer Financial Protection Bureau: General QM loan definition final rule (a price-based test replaces the 43% limit)
Common questions
How much house can I afford on $72,000 a year?
What is the 28/36 rule?
Does my car loan really affect how much house I can buy?
What costs does the monthly payment include?
How much cash do I need at closing?
Is 43% the maximum debt-to-income ratio for a mortgage?
Should I buy at the maximum this calculator gives me?
Guides that explain the rules
Related tools
This tool produces a document from the information you type. It does not give legal, tax or accounting advice, and it does not check that your figures or rates are right. See the disclaimer. Found a mistake? Report an error in a calculation.