About this calculator
Most affordability advice starts from the house and asks "can I afford this?" — lenders start from the other end. They apply the 28/36 rule: housing costs should stay under 28% of your gross monthly income, and housing plus all other debts under 36%. The tighter of the two becomes your monthly housing budget, and this calculator converts that budget into the highest home price it can carry.
The price is solved, not guessed: it is the point where principal and interest, property tax for your state, homeowners insurance, HOA dues and — when your down payment is under 20% of the price — private mortgage insurance exactly consume the budget. Change any input and the ceiling moves, which is the honest way to see what an extra $10,000 of down payment, or $200 less monthly debt, actually buys you.
How to use it
- Enter your gross annual income and your monthly debt payments (car loans, credit card minimums, student loans — not utilities or subscriptions).
- Add the down payment you have saved, the mortgage rate you expect, and your state so property tax matches local reality.
- Read the maximum price and the breakdown at that price — then try the rate table to see how much a 1% rate move changes your ceiling.
The formula
The 28% figure is the "front-end" ratio and the 36% figure the "back-end" ratio, the classic underwriting guidelines used for conventional loans in the US. PMI is estimated at 0.6% of the loan per year and applies only while the loan exceeds 80% of the price.
Worked example
On a $100,000 income with $400 a month of debts, a $40,000 down payment, a 6.8% 30-year loan and US-average property tax, the 28% rule sets the housing budget at $2,333 a month (the 36% rule would allow $2,600). That carries a home of about $317,000: $1,807 of principal and interest, $238 of tax, $150 of insurance and $139 of PMI — the $40,000 down payment is under 20% at this price. A 1% lower rate would lift the ceiling to about $342,500.
Sources: The 28/36 rule (28% of gross income on housing, 36% on housing plus all debts), the classic US conventional-loan underwriting guideline. Last updated: October 2026.
Frequently asked questions
What is the 28/36 rule?
A long-standing underwriting guideline: no more than 28% of gross monthly income on housing costs (mortgage, tax, insurance, HOA), and no more than 36% on housing plus all other recurring debts. Some lenders stretch to 43–50% on the back-end ratio for well-qualified borrowers, but 28/36 remains the prudent benchmark most advisors quote.
How much house can I afford on a $100,000 salary?
With typical debts ($400/month), a $40,000 down payment and a 6.8% rate, roughly $300,000–$330,000 under the 28/36 rule — the exact figure depends heavily on your state property tax and whether PMI applies. Run the calculator with your real numbers; high-tax states like New Jersey or Texas can pull the ceiling down by tens of thousands.
Should I actually spend the maximum it shows?
Treat it as a ceiling, not a target. The rule uses gross income and ignores childcare, savings goals, maintenance (budget roughly 1% of the home value per year) and the fact that a house is illiquid. Many buyers are comfortable 10–20% below their computed maximum.
How much does paying off a car loan help?
Directly, when the 36% rule is your binding limit: every $100 of monthly debt removed adds $100 to your housing budget, which at a 6.8% rate supports roughly $15,000–$16,000 more home. If the 28% rule binds instead, extra income — not less debt — is what raises your ceiling.
What formula does this home affordability calculator use?
Housing budget = min(28% × gross monthly income, 36% × gross monthly income − monthly debts); max price solves P&I + tax + insurance + HOA + PMI = budget The 28% figure is the "front-end" ratio and the 36% figure the "back-end" ratio, the classic underwriting guidelines used for conventional loans in the US. PMI is estimated at 0.6% of the loan per year and applies only while the loan exceeds 80% of the price. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.