How the home affordability calculator works
Lenders cap two debt-to-income (DTI) ratios. The classic conventional guideline is the 28/36 rule:
Housing payment + other debts ≤ 36% × monthly gross income
The smaller of the two limits is your maximum monthly housing payment, H. The housing payment for a price X with down payment D is:
k = r(1 + r)n ÷ ((1 + r)n − 1)
k is the monthly payment per dollar borrowed (r = rate ÷ 12, n = months). PMI (loan × PMI rate ÷ 12) applies when the down payment is under 20% of the price. Because H is linear in X, the calculator solves for X directly instead of guessing:
where p is the monthly PMI rate (0 if you put 20% or more down). Closing costs, which typically run 2% to 5% of the price, are not included and need to come from savings on top of the down payment.
Worked example
A household earns $100,000 a year ($8,333.33 a month), pays $500 a month on a car loan and has $60,000 for a down payment. Rates are 6.5% for 30 years, with 1.1% property tax and $1,800 a year of insurance.
Back-end limit: 36% × 8,333.33 − 500 = $2,500.00
Max housing payment H = $2,333.33
$60,000 is less than 20% of the likely price, so PMI at 0.6% applies. Solving the formula gives a maximum price of about $335,000 ($335,073), a loan of about $275,073 and principal and interest of about $1,739 a month. Add $307 of tax, $150 of insurance and $138 of PMI to reach the $2,333 limit.
Frequently asked questions
How much house can I afford on my salary?
A common guideline is that your total housing payment (principal, interest, taxes, insurance, PMI and HOA) should be no more than 28% of your gross monthly income, and all debt payments together no more than 36%. On $100,000 a year with $500 of other debts, With $60,000 down at 6.5% for 30 years, that works out to roughly $335,000.
What is the 28/36 rule?
It is a lending guideline: spend no more than 28% of gross monthly income on housing and no more than 36% on all debts including housing. Many loan programs allow higher ratios, for example FHA often allows about 31/43 and some conventional loans approve back-end ratios up to about 45% to 50% with strong credit.
What counts as monthly debt?
Minimum payments on car loans, student loans, credit cards, personal loans, child support and alimony. Everyday bills such as utilities, groceries and phone plans do not count toward DTI, although they still need to fit your budget.
Do I need 20% down?
No. Conventional loans allow as little as 3% to 5% down and FHA loans 3.5%. Below 20% down you usually pay private mortgage insurance (PMI) on conventional loans, which this calculator includes, until you reach about 20% equity.
Should I buy the most house I can afford?
Not necessarily. The lender maximum does not account for savings goals, childcare, retirement contributions, maintenance (often 1% to 2% of the home's value a year) or an emergency fund. Many people choose a price comfortably below the maximum.
Are closing costs included?
No. Closing costs usually run 2% to 5% of the purchase price and are paid in cash at closing, on top of your down payment. Keep them in mind when deciding how much of your savings to put down.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.