How much house can I afford based on my income?

A common guideline is that your home price should be 3–4× your gross annual income, but the real answer depends on your debts, down payment, and the 28/36 rule. Our calculator takes all of those into account: it caps your housing payment at 28% of monthly income and your total debt payments (housing + debts) at 36% (or your chosen target DTI). The result is a data-driven max home price, not just a rough multiple.

What is the 28/36 rule?

The 28/36 rule is a classic mortgage underwriting guideline. The '28' means your monthly housing payment (principal, interest, taxes, insurance, HOA, and PMI) should not exceed 28% of your gross monthly income. The '36' means your total monthly debt obligations (housing + car loans + student loans + credit cards + any other debts) should not exceed 36% of your gross monthly income. Lenders use these thresholds to gauge whether you can repay the loan without financial strain.

How does my credit score affect how much house I can afford?

Your credit score doesn't change the 28/36 math, but it directly affects the interest rate lenders offer you. Scores of 760+ get the best rates; below 620, conventional loans become difficult. A 0.5% rate difference can shift your max loan amount by 5%–7%, so improving your score before applying is one of the highest-leverage ways to boost affordability.

Should I use 28% or 36% as my affordability limit?

Use both — they measure different things. The 28% front-end limit protects you from being house-poor (all your money going to housing). The 36% back-end limit ensures you can still service your other debts. The binding constraint is the smaller of the two: if you have high existing debt, the 36% back-end limit will bind; if you have little debt, the 28% front-end limit usually binds first.

Does a larger down payment increase how much house I can afford?

Yes, in two ways. First, every dollar of down payment adds directly to your max home price (max price = max loan + down payment). Second, a down payment of 20% or more eliminates PMI, freeing up more of your monthly housing budget for principal and interest. Going from 5% down to 20% down can raise your max home price by 10%–15%.

What is DTI (debt-to-income ratio) and why does it matter?

DTI is the percentage of your gross monthly income that goes to debt payments. Front-end DTI considers only housing; back-end DTI adds all other debts. Lenders use DTI as a key underwriting criterion — most conventional loans cap back-end DTI at 43%, though 36% is the safer consumer guideline. Lower DTI means more borrowing capacity and less financial stress.

What if my monthly debts are too high to afford any home?

If the calculator shows $0 max home price, your existing debts consume too much of your income to leave room for a mortgage under the 36% rule. Focus on paying down high-interest debt (credit cards, personal loans) first — every $100/month of debt service you eliminate raises your max housing payment by $100. Even six months of aggressive debt payoff can materially change your affordability.

How accurate is this affordability calculator?

This calculator gives a solid baseline using the same 28/36 rule most lenders use, but it's an estimate — not a pre-approval. Real lenders also consider employment history, reserves (cash left after closing), property type, and loan program specifics. Use this as a starting point, then get pre-approved by a lender for a binding number before shopping for homes.

Affordability Calculator

A home affordability calculator is a free online tool that estimates how much house you can afford. It uses the 28/36 rule, your income, debts, and down payment to find your budget range. Free, no sign-up required.

Your Financial Profile

Annual Income?Your total gross annual income before taxes and deductions.

Monthly Debt Payments?Your current monthly debt obligations (credit cards, car loans, student loans, etc.).

Down Payment?The amount you plan to pay upfront when purchasing the home.

Interest Rate?The annual interest rate on your mortgage loan.

Loan Term?The length of your mortgage in years. Common terms are 15 or 30 years.

Target DTI?Your maximum debt-to-income ratio threshold. Lenders typically prefer DTI below 43%.

Credit Score?Your credit score ranges from 300 to 850. Higher scores qualify for better rates.

End of inputs

How Much House You Can Afford

Max Home Price

$325,784.68

3.4× annual income

Max Loan Amount

$265,784.68

With $60,000.00 down

Monthly Payment

$2,217.07

Housing only

Front-End DTI

28.01%

28% limit

Back-End DTI

33.06%

36.00% limit

Total Monthly

$2,617.07

Housing + debts

Budget Range

Conservative (80%)

$260,627.74

Aggressive (100%)

$325,784.68

Monthly Payment Breakdown

Key Insights

Your credit score of 720 is solid — you'll qualify for competitive rates. Pushing above 760 could unlock another 0.125%–0.25% rate reduction, marginally improving borrowing power.

Your back-end DTI of 33.06% leaves about 2.94% of headroom below your 36.00% target — a reasonable buffer for property tax hikes or emergencies.

Your down payment of $60,000.00 is 18.42% of the max price — under 20%, so PMI of $121.82/mo (estimated) will apply until you reach 80% LTV. Consider saving more to avoid it.

Your max home price of $325,784.68 is 3.4× your annual income — right in the recommended 3–4× range. This is a sustainable affordability zone.

Your existing monthly debts of $400.00 are 5.05% of your monthly income — manageable, but every dollar of debt service reduces your mortgage budget dollar-for-dollar.

Your assumed rate of 6.50% is in a typical range for current market conditions. Rates in this band keep your max price predictable — small fluctuations have a modest impact.

DTI analysis: Housing is 28.01% of income; total debt is 33.06%. PMI of $121.82/mo applies (down payment < 20%). Price-to-income: 3.4×.

Guide

How to Use This Calculator

1Enter your gross annual income (before taxes) — include co-borrower income if applying jointly.
2Add your existing monthly debt payments: car loans, student loans, credit card minimums, personal loans, child support, etc.
3Enter the cash you have available for a down payment (don't include closing cost reserves here).
4Set the interest rate you expect — check current mortgage rates or use a recent lender quote.
5Choose the loan term (15, 20, or 30 years). Longer terms mean lower payments and higher max price, but more total interest.
6Adjust the target DTI if you want a more conservative limit (e.g. 30% instead of 36%).
7Enter your credit score — it doesn't change the math, but it powers personalized AI insights about your loan options.
8Review the max home price, monthly payment breakdown, DTI analysis, and budget range (conservative to aggressive).

Formula

How It's Calculated

Affordability is calculated by inverting the mortgage amortization formula under the 28/36 DTI constraints.

Step 1 — Determine the maximum monthly housing payment:
  Front-end limit (28% rule):  maxHousing = monthlyIncome × 0.28
  Back-end limit (36% rule):   maxHousing = monthlyIncome × targetDti − monthlyDebt
  Binding constraint:          maxHousing = min(frontEndLimit, backEndLimit)

Step 2 — Subtract non-P&I housing costs to get the P&I budget:
  maxPI = maxHousing − propertyTax − insurance − HOA − PMI

Step 3 — Invert the amortization formula to solve for principal:
  Standard payment formula:  M = P × [r(1+r)^n] / [(1+r)^n − 1]
  Inverted:                  P = M × [(1+r)^n − 1] / [r(1+r)^n]
  For zero-rate loans:       P = M × n

Step 4 — Add the down payment to get the max home price:
  maxHomePrice = maxLoanAmount + downPayment

PMI note: When down payment < 20%, PMI is required. PMI depends on LTV,
which depends on loan amount — a circular dependency resolved by
fixed-point iteration (assume no PMI → recompute with PMI → repeat).

Budget range:
  Conservative (80% of max):  leaves headroom for rate increases or surprises
  Aggressive (100% of max):   at the DTI limit, no margin for error

Example: $95,000 income, $400/mo debt, $60,000 down, 6.5%, 30y, 36% DTI.
- Monthly income:  $7,916.67
- 28% limit:       $2,216.67
- 36% limit:       $2,050.00  (binds first because of debt)
- Max P&I:         ~$1,900
- Max loan:        ~$300,000
- Max home price:  ~$360,000

Glossary

Key Terms

FAQ

Frequently Asked Questions

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