Stop guessing and find out the real number. This calculator uses the 28/36 qualifying rule that lenders actually apply — factoring in your income, existing debts, down payment, taxes, and insurance — to show the maximum home price you can realistically afford.
Pro tip: Lenders look at two ratios: your front-end DTI (housing costs ÷ gross income ≤ 28%) and back-end DTI (all debts ÷ gross income ≤ 36%). Exceeding either one shrinks your approval amount — even a $200/mo car payment can cut $30K+ off your max home price.
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How to Use the Home Affordability Calculator
Start with your annual gross income — the total before taxes and deductions, not your take-home pay. Add any recurring monthly debt payments (car loans, student loans, credit card minimums, personal loans). Choose your down payment percentage and adjust the interest rate to match current market conditions. The calculator instantly shows the maximum home price a lender would approve based on standard qualifying ratios.
The 28/36 Rule Explained
Most conventional lenders use two debt-to-income (DTI) thresholds to determine how much you can borrow. The front-end ratio caps your total housing costs — principal, interest, property taxes, and insurance (PITI) — at 28% of your gross monthly income. The back-end ratio caps all monthly debt obligations (PITI plus car payments, student loans, credit cards, etc.) at 36% of gross income. Whichever limit is reached first determines your maximum approval. This calculator checks both and uses the more conservative result.
Why Down Payment Size Matters More Than You Think
Putting down less than 20% triggers private mortgage insurance (PMI), which typically adds 0.5–1% of the loan balance annually to your payment. On a $300,000 loan, that is an extra $125–$250 per month that does not build equity. A larger down payment also reduces your loan amount, which means lower monthly payments and significantly less interest over the life of the loan. Even increasing your down payment from 10% to 15% can save tens of thousands in total interest.
How Existing Debt Shrinks Your Buying Power
Every dollar of monthly debt reduces the housing payment a lender will approve. A $400/mo car payment on a $85,000 income could reduce your maximum home price by $55,000 or more. Before house-hunting, consider paying off credit cards and small loans. Even reducing your car payment by refinancing can meaningfully increase your approved mortgage amount.
Interest Rates and Affordability
Small changes in interest rates have an outsized impact. On a $350,000 mortgage, the difference between a 6.0% and 7.0% rate is roughly $230 per month and over $83,000 in total interest over 30 years. Use the rate scenario comparison (Pro feature) to see exactly how different rates affect your purchasing power. If rates are high, consider a 15-year mortgage — rates are typically 0.5–0.75% lower, and you build equity dramatically faster.
What This Calculator Does Not Include
This tool estimates your maximum qualifying amount based on standard lending guidelines. Your actual approval may differ based on credit score, employment history, asset reserves, and the specific loan program. FHA loans allow DTI ratios up to 43% (sometimes higher), VA loans have no official DTI cap, and some conventional programs allow up to 45% back-end DTI with compensating factors. Always get pre-approved by a lender for your definitive number.
Tips to Increase Your Home Affordability
- Pay down debt — Every $100/mo in debt you eliminate adds roughly $14,000 to your buying power
- Increase your down payment — Eliminates PMI at 20% and reduces your monthly obligation
- Improve your credit score — A score above 740 typically qualifies you for the best rates
- Consider a 15-year loan — Lower rate, faster equity, less total interest
- Shop multiple lenders — Rate differences of 0.25–0.5% are common and worth thousands over time
- Buy below your max — Just because you qualify for $400K does not mean you should spend $400K
Looking for related tools? Try our Mortgage Calculator to estimate your monthly payment, or explore all Home & Real Estate tools.
Frequently Asked Questions
What is the 28/36 rule?
Lenders cap housing costs (principal, interest, taxes, insurance) at 28 percent of gross monthly income (front-end DTI), and all debt payments combined at 36 percent (back-end DTI). A household earning 8,000 dollars monthly can afford up to 2,240 in housing costs and 2,880 total debt payments.
How much house can I afford on 100k salary?
At 100,000 dollars annual income (8,333 monthly), with no other debts, 7 percent interest, 20 percent down, and 1.2 percent property tax, you could afford a home around 380,000 to 420,000 dollars. Carrying a 400 dollar car payment drops that by 60,000 to 80,000 dollars.
Do lenders use gross or net income?
Gross income before taxes. Mortgage qualification uses gross to compare with national housing data and because take-home pay varies based on withholdings, benefits, and 401k contributions that a borrower could technically pause to make payments.
How does a down payment affect how much I can borrow?
A larger down payment doesn't increase borrowing power but lets you buy a more expensive home without changing your monthly payment. It also eliminates PMI at 20 percent down, often saving 100 to 300 dollars monthly. On a 400,000 home, 10 percent down requires PMI; 20 percent down does not.
Should I buy at my maximum qualification?
Usually no. Lenders qualify you based on gross income, but your actual budget has to cover utilities, maintenance (plan 1 percent of home value per year), repairs, retirement savings, and lifestyle. Many financial advisors suggest spending 20 to 25 percent of gross income on housing, not the full 28 percent.