How the home affordability calculator works
Mortgage lenders mostly decide how much you can borrow with two debt-to-income (DTI) ratios. The front-end ratio caps your total housing payment (principal, interest, property tax, insurance, PMI and HOA) at a share of your gross monthly income, traditionally 28%. The back-end ratio caps your housing payment plus every other monthly debt payment (car loans, student loans, credit card minimums, personal loans) at 36%. The calculator works out both limits, keeps the lower one, and then solves for the most expensive home whose full monthly payment fits inside it, after your down payment.
The formula
Maximum housing payment H = min(income ÷ 12 × 28%, income ÷ 12 × 36% − other debts). The monthly cost of a home priced P with down payment D is (P − D) × a + P × tax rate ÷ 12 + insurance ÷ 12 + HOA, plus PMI when you put down less than 20%, where a = r / (1 − (1 + r)−n) is the payment per dollar borrowed. Setting that cost equal to H and solving for P gives the maximum price. Because PMI switches on below 20% down, the calculator checks both cases and returns the higher price that still fits.
Example
A household earning $100,000 a year with $400 a month in other debts and $40,000 saved for a down payment can spend up to $2,333 a month on housing under the 28% rule (the 36% rule would allow $2,600 after debts, so the 28% rule is the tighter one). At a 6.5% 30-year rate, a 1% property tax rate, $1,800 a year of insurance and 0.5% PMI, that payment supports a home of about $324,000 with a loan of roughly $284,000. If the same household had $1,200 a month in car and student loan payments instead, the back-end rule would take over and the budget would fall to about $254,000.
What lenders actually allow
28/36 is the classic conservative guideline, not a hard legal limit. Many conventional loans approved through automated underwriting accept a back-end DTI up to about 45% (sometimes 50%) with good credit and cash reserves, and FHA loans often go to 43% or higher. You can raise the two percentages above to see what a lender might approve, but being approved for a payment does not mean it fits your budget once you add utilities, maintenance, commuting and saving for retirement. Many buyers deliberately shop below their maximum.
Ways to afford more house
Paying off a small car loan or credit card balance before you apply lowers your back-end ratio, often more than a raise would. A larger down payment reduces the loan and can remove PMI entirely at 20%. Improving your credit score usually earns a lower interest rate, and a one-point lower rate can add tens of thousands of dollars to your budget. Finally, compare property tax rates between towns: a home in a lower-tax county can cost noticeably less each month at the same price.
Frequently asked questions
How much house can I afford on a $100,000 salary?
Using the 28/36 rule, a 6.5% 30-year rate, $40,000 down and $400 of other monthly debts, roughly $320,000–$330,000. Lower debts, a bigger down payment or a lower rate push that number up.
What is the 28/36 rule?
A guideline that your housing payment should stay at or below 28% of gross monthly income and all debt payments, including housing, at or below 36%.
Which debts count toward the back-end ratio?
Minimum payments on car loans, student loans, credit cards, personal loans, child support and alimony. Utilities, phone bills, groceries and insurance other than homeowners insurance usually do not count.
Does this include closing costs?
No. Closing costs typically run 2%–5% of the loan amount and must be paid in cash at closing in addition to your down payment, so keep that money separate from the down payment figure you enter.
Should I use gross or take-home income?
Lenders use gross income (before taxes and deductions), so the calculator does too. If you want a more cautious budget, lower the percentage limits.
Results are estimates for educational purposes only and are not financial, tax, legal or medical advice. See our disclaimer. Last reviewed 2026-10-26.