House Affordability Calculator

The 28/36 rule

Lenders cap two ratios when deciding what you qualify for:

Front-end (28%) — Total housing payment (principal, interest, taxes, insurance, PMI, HOA) shouldn't exceed 28% of your gross monthly income.
Back-end (36%) — Total monthly debt obligations (housing + all other debt) shouldn't exceed 36% of gross monthly income.

The tighter of the two binds. Lots of existing debt? The back-end limit hits first. No other debts? Front-end determines your ceiling.

What's actually a "good" budget

The 28/36 rule is what lenders will let you do. Many financial advisors recommend tighter — around 25% of gross or 30% of net for housing. That leaves room for retirement savings, emergencies, and the inevitable surprise expense.

How the max price is found

The tighter of the two ratios sets a monthly housing-payment ceiling (PITI: principal, interest, taxes, insurance, PMI, HOA). From there, this calculator searches for the highest home price whose PITI lands right at that ceiling — since taxes and PMI both scale with price, there's no simple algebra shortcut, so it narrows the range step by step until the price converges.

PITI(price) = M(price − down) + tax·price/12 + insurance/12 + HOA + PMI

where M(loan) is the standard mortgage-payment formula, tax defaults to 1.1% of price annually, insurance defaults to $1,500/year, and PMI applies only when the loan-to-value ratio exceeds 80%.

Worked example

$120,000 annual income ($10,000/mo), $500/mo existing debt, $40,000 down, 6.5% rate, 30-year term.

28% cap: $10,000 × 0.28 = $2,800/mo
36% cap: $10,000 × 0.36 − $500 = $3,100/mo

$2,800 is tighter, so the front-end rule binds. Searching for the home price whose full PITI equals $2,800/mo lands at a maximum home price of $384,699, a loan of $344,699, and a loan-to-value of about 89.6% — above 80%, so PMI applies and is already folded into that $2,800 ceiling.

Frequently asked questions

Why does my down payment matter twice?

It shrinks the loan you need (less principal and interest), and if it crosses the 20%-of-price line, it also removes PMI — which is pure cost with no offsetting equity. Both effects raise the home price you can reach under the same PITI ceiling.

What if I have no other monthly debt?

Then the front-end (28%) rule always binds, because the back-end cap (36% of income) is mathematically larger than the front-end cap (28% of income) once there's nothing to subtract from it. Existing debt is the only thing that can make the back-end tighter than the front-end.

Does this include property tax, insurance, and PMI?

Yes — the "maximum home price" already accounts for all of it, using a 1.1% annual property-tax rate, $1,500/year insurance, and 0.5% annual PMI when your down payment is under 20%. Real taxes and insurance vary a lot by state and property, so treat this as a solid estimate, not a quote.

Is the 28/36 rule the same everywhere?

No. Conventional lenders often use 28/36 as a conservative baseline, but FHA loans commonly allow up to roughly 31/43, and borrowers with strong compensating factors — high credit score, large reserves, big down payment — can sometimes go higher still. This calculator uses the conservative 28/36 baseline by default.