House Affordability Calculator
Using the lenders' 28/36 rule — housing under 28% of gross income, all debts under 36% — estimate the most expensive home your income supports, with taxes and insurance counted.
The 28/36 rule — the lender's first filter
Before a lender looks at your credit, it looks at two ratios. Housing costs should not exceed 28% of your gross monthly income; housing plus all other debt payments should not exceed 36%. This calculator inverts those ratios: from your income and debts it derives the largest housing payment the rule allows, then the home price that payment supports at your rate and term.
Allowed housing = min(28% of gross monthly income, 36% of gross − other debts)
Example: on $90,000 a year ($7,500 a month), the front ratio allows $2,100 of housing; with $350 of other debts the back ratio allows $2,350 — so $2,100 governs, and taxes and insurance must fit inside it alongside principal and interest.
A ceiling is not a recommendation
The rule dates from an era of cheaper childcare, healthcare and student debt. Many households find the rule's maximum genuinely uncomfortable, and many lenders today approve back ratios well above 36% — which says something about lender incentives and nothing about your budget. Use this figure as the outer fence, and test smaller prices until the payment feels boring.
How this is calculated
Front ratio 28% and back ratio 36% of gross monthly income; the binding budget is the smaller of the two. The home price is then found by solving, numerically, for the price whose monthly cost — principal and interest on price minus down payment, plus price × tax rate ÷ 12, plus insurance ÷ 12 — equals that budget. Benchmarks are labeled as benchmarks: they are underwriting tradition, not law or advice.
Frequently asked questions
Is income gross or take-home in the 28/36 rule?
Gross — income before tax. That is one reason the rule's answer can feel too generous: 28% of gross is a bigger share of what actually reaches your bank account.
What counts as a debt in the back ratio?
Minimum and contractual monthly payments that appear on your credit report: car loans, student loans, card minimums, personal loans. Utilities, groceries and subscriptions do not count in the lender version.
My lender approved more than this. Are they wrong?
Not necessarily wrong — modern automated underwriting often accepts back ratios into the mid-40s with strong credit and reserves. Approval measures the lender's risk model, not your comfort.
Does a bigger down payment raise the affordable price?
Yes, in two ways: it shrinks the loan, and it lowers the tax-plus-insurance share needed per dollar of price — no, taxes depend on price alone. The loan shrinkage is the real effect, and it is fully counted here.
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