Home Affordability Calculator
On an $80,000 salary with no other monthly debt and a 6.5% rate, you can afford about a $240,000 home under the 28% rule. Enter your annual income, monthly debts, down payment, and rate to estimate your maximum home price and monthly payment. The calculator applies the standard 28/36 guideline that most lenders use to size a comfortable mortgage.
Quick answer
Affordability is capped by two ratios: housing costs at 28% of gross income and total debt at 36%.
What this tells you
- •Affordability is capped by two ratios: housing costs at 28% of gross income and total debt at 36%.
- •The lower of the two limits sets your maximum monthly payment, then taxes and insurance are subtracted to find the loan budget.
- •Your max home price is the loan you can support at the entered rate plus your down payment.
How to Use
- 1Enter your gross annual income before taxes.
- 2Add your total monthly debt payments such as car loans, student loans, and credit card minimums.
- 3Enter your planned down payment, interest rate, and loan term.
- 4Adjust the monthly taxes and insurance estimate and the ratio limits if your lender uses different ones.
- 5Click Calculate to see your max home price, monthly payment, and loan budget.
How It Works
Formula
Monthly Income = Annual Income / 12
Max Payment = min(Monthly Income x 28%, Monthly Income x 36% - Monthly Debts)
Loan Budget = Max Payment - Taxes and Insurance
Max Loan = Loan Budget x (1 - (1 + r)^-n) / r
Max Home Price = Max Loan + Down PaymentThe front-end limit caps housing costs at 28% of gross monthly income. The back-end limit caps all debt at 36%, so existing payments reduce what is left for housing. The lower limit becomes your maximum payment. Subtract estimated taxes and insurance to get the principal and interest budget, then convert that to a loan amount using the standard mortgage formula where r is the monthly rate and n is the number of payments. Adding your down payment gives the home price you can target.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
$80,000 income, no other debt, 6.5% rate
Monthly income is $6,666.67. The 28% front-end limit allows $1,866.67, below the 36% back-end limit of $2,400, so it binds. After $350 for taxes and insurance, the loan budget is $1,516.67, which supports about a $239,953 loan at 6.5% over 30 years.
$80,000 income with $1,000 in monthly debts
The 36% back-end limit is $2,400, but $1,000 of existing debt leaves only $1,400 for housing. That is below the 28% front-end limit of $1,866.67, so the back-end ratio now sets the payment and the affordable home price drops.
Affordable Home Price by Income
28% rule, 6.5% rate, $350 monthly taxes and insurance, no other debt
| Annual Income | Approx. Home Price |
|---|---|
| $50,000 | $129,000 |
| $75,000 | $221,000 |
| $100,000 | $314,000 |
| $125,000 | $406,000 |
| $150,000 | $498,000 |
Figures assume a 30-year loan at 6.5% with $350 a month for taxes and insurance and no other debt. Other debts, a higher rate, or higher taxes lower these amounts.
The 28/36 Rule Explained
The 28/36 rule is the affordability guideline most lenders start with. The first number, 28%, is the front-end ratio: your housing payment, including principal, interest, taxes, and insurance, should stay at or below 28% of your gross monthly income. The second number, 36%, is the back-end ratio: all of your monthly debt payments combined, including the new housing payment, should stay at or below 36% of gross income.
When you carry little or no other debt, the 28% front-end limit usually sets your maximum payment. As your car, student, and credit card payments grow, the 36% back-end limit takes over and lowers how much is left for a mortgage. That is why paying down existing debt can raise the home price you qualify for even when your income has not changed.
These ratios are a starting point, not a hard ceiling. Some loan programs allow higher ratios with strong credit or large reserves, and lenders apply their own overlays. Use this estimate to set a realistic target, then confirm the exact numbers with a lender before you shop.
Common mistakes
- Using net take-home pay instead of gross income, which understates the limits
- Leaving out monthly debts, which raises the estimate above what a lender would approve
- Forgetting that taxes and insurance are part of the payment, not extra on top of it
- Assuming the maximum you qualify for is the amount you should actually spend
Limitations
This calculator is an estimate based on the 28/36 rule and the numbers you enter. It does not include private mortgage insurance, HOA dues, or full lender underwriting, and it does not run a credit check. Lenders apply their own overlays, debt definitions, and ratio limits, and loan programs such as FHA or VA use different thresholds. Your taxes and insurance are a single monthly estimate rather than a price-based calculation, so verify them for your area.