Home affordability calculator
A common rule of thumb says your housing payment should stay under 28 percent of gross monthly income and all your debts under 36 percent. This calculator uses that rule, your down payment and an example rate to estimate a comfortable price range. Lenders use their own limits, which vary by program.
Educational estimate based on the numbers you enter and common rules of thumb. Not a loan offer, rate quote, approval or financial advice. A licensed loan officer can run your real numbers.
How this calculator works
This calculator works backward from your income. It divides your yearly gross income by 12, then finds the largest housing payment that fits the 28/36 rule of thumb. That is the smaller of two amounts: the housing share of income, or the total debt share minus your current monthly debts. It then solves for the home price whose principal and interest, property tax, insurance and HOA dues add up to that payment, using your down payment savings and the rate you enter. Enter the rate from your own quote or Loan Estimate; the field starts empty.
Assumptions: all of your down payment savings go toward the price, and nothing is held back for closing costs or reserves. Mortgage insurance is not included, so if your down payment is small the real payment could be higher than shown. Property tax is estimated from the price. The loan is a fixed rate over the term you choose, and your monthly debts are taken exactly as you enter them.
This is a comfort estimate, not what a lender will approve. Lenders set their own debt-to-income limits by program, and they verify income, debts, credit, savings and the property. Some programs allow higher ratios with strong savings or credit, and others are stricter. A lender also counts debts the way they appear on your credit report, which may differ from your own list.
Example: enter $120,000 of gross annual income, $500 of monthly debts, your down payment savings and the rate from your quote. Then lower the debts to $0 to see how paying off a car loan could change the comfortable price.
Related: Debt-to-income calculator · Mortgage payment calculator · Down payment goal planner · Which home loan is right for me?
Common questions
What is the 28/36 rule?
It is a budgeting rule of thumb: keep housing costs under about 28 percent of gross monthly income and total debt payments under about 36 percent. Many lenders allow higher ratios depending on the program, but staying near these levels leaves room in your budget.
Is this how much a lender will approve?
No. It is a comfort estimate. Lenders set their own debt-to-income limits and look at credit, savings and the property. A licensed loan officer can tell you what you qualify for.
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