How to use this house affordability calculator
- Enter your household’s gross annual income: pay before taxes for everyone who will be on the loan.
- Add your monthly debt payments: the minimum payments on car loans, student loans, credit cards and other loans. Leave out rent, utilities and groceries.
- Enter the cash you have for a down payment, then your interest rate and loan term. The default rate is the 7.03% national average for a 30-year fixed loan (Freddie Mac Primary Mortgage Market Survey (PMMS), Sep 24, 2026). A rate quote from your lender gives the most accurate answer.
- Pick a debt-to-income rule and, under “Property tax, insurance, HOA & PMI,” adjust the costs for the area you’re shopping in.
- Read the maximum price and the limit that sets it. If your debts are the constraint, the calculator shows how much paying them down would add to your budget.
How much house can I afford? The 28/36 rule
Lenders judge affordability by your debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income. The classic guideline, the 28/36 rule, uses two of them:
- Front-end ratio (28%): your full housing payment (principal, interest, property tax, homeowners insurance, PMI and HOA dues) should be no more than 28% of gross monthly income.
- Back-end ratio (36%): that housing payment plus every other debt payment should be no more than 36%.
The lower of the two limits is your housing budget. For the example household, gross monthly income is $8,333. The front-end limit allows $2,333 for housing; the back-end limit allows $3,000 for all debts, which leaves $2,500 after the $500 of existing payments. The smaller figure, $2,333 a month, sets the budget, so here the front-end limit applies. The back-end ratio takes over once other debts pass $667 a month (8% of income), and from then on every dollar of debt payment is a dollar less for housing.
Affordability formula and worked example
First find the most you can spend on housing each month:
M = min(F × G, B × G − Dm)
- M
- maximum monthly housing payment
- G
- gross monthly income (annual income ÷ 12)
- F, B
- front-end and back-end DTI limits (0.28 and 0.36 under the 28/36 rule)
- Dm
- other monthly debt payments
The housing payment on a home priced at P is the mortgage payment on the loan (P − D) plus property tax, insurance, HOA dues and, when the down payment is under 20%, PMI. Because the principal-and-interest payment grows in step with the loan amount, the maximum price solves directly:
P = (M − C + (k + m) × D) / (k + m + t), where k = r / (1 − (1 + r)^−n)
- P
- maximum home price
- D
- down payment
- k
- monthly principal and interest per $1 borrowed (r = annual rate ÷ 12, n = months)
- m
- PMI rate ÷ 12 (0 when the down payment is at least 20%)
- t
- property tax rate ÷ 12
- C
- monthly homeowners insurance + HOA dues
Worked example
With $100,000 of income, G = $8,333.33 and M = min($2,333.33, $3,000.00 − $500.00) = $2,333.33. At 7.03% for 30 years, k = 0.0066732; property tax of 1% gives t = 0.00083333; PMI of 0.5% gives m = 0.00041667; insurance of $1,800 a year makes C = $150.00; and D = $40,000. Then P = ($2,333.33 − $150.00 + 0.0070899 × $40,000) ÷ 0.0079232 = $311,356. The loan is $271,356 and the monthly payment is $1,810.81 principal and interest, $259.46 tax, $150.00 insurance and $113.06 PMI: $2,333.33, exactly the $2,333.33 budget.
The calculator finds the same price numerically (by bisection), which also handles the jump in cost when PMI starts: if a price just above the 20%-down point would break the budget only because of PMI, the maximum is the 20%-down price itself.
How much house can I afford on my salary?
Maximum home price by gross household income and 30-year fixed rate, assuming $40,000 down, $500 of other monthly debts, 1% property tax, $1,800 a year for insurance, 0.5% PMI below 20% down and the 28/36 rule:
| Household income | 5.5% | 6% | 6.5% | 7% | 7.5% |
|---|---|---|---|---|---|
| $50,000 | $165,424 | $159,591 | $154,155 | $149,087 | $144,360 |
| $60,000 | $201,184 | $200,000 | $196,090 | $189,160 | $182,696 |
| $75,000 | $266,139 | $256,226 | $246,939 | $238,236 | $230,080 |
| $90,000 | $316,660 | $304,532 | $293,170 | $282,523 | $272,545 |
| $100,000 | $350,340 | $336,736 | $323,990 | $312,048 | $300,854 |
| $125,000 | $434,541 | $417,245 | $401,042 | $385,859 | $371,629 |
| $150,000 | $518,741 | $497,755 | $478,094 | $459,671 | $442,403 |
| $200,000 | $687,143 | $658,774 | $632,197 | $607,293 | $583,952 |
| $250,000 | $855,544 | $819,794 | $786,300 | $754,916 | $725,501 |
At incomes up to $75,000, the $500 of monthly debt payments makes the back-end limit the tighter one; above that, the 28% housing limit applies. Your own debts, down payment and local taxes can move these numbers a lot, so use the calculator for your situation.
How does that compare with actual prices? A household earning the national median income of $87,460 (2025, U.S. Census Bureau) could afford about $274,426 under these assumptions at 7.03%, $154,674 less than the $429,100 median price of existing homes sold in August 2026 (NAR). A bigger down payment, a lower rate, fewer debts or a lower-cost area closes the gap.
How lenders use debt-to-income ratios
Every mortgage lender checks DTI, but the limits depend on the loan program and on how the loan is underwritten. Use our debt-to-income calculator to see your current ratios.
- Conventional loans (Fannie Mae): total DTI of up to 36% for manually underwritten loans, up to 45% if you meet its credit score and reserve requirements, and up to 50% for loans approved through Desktop Underwriter. Fannie Mae’s guide sets a total (back-end) limit rather than a separate housing ratio.
- FHA loans: HUD’s benchmark for manually underwritten loans is 31% for housing and 43% for total debt. Borrowers with credit scores of 580 or higher can go to 37/47 with one documented compensating factor (such as cash reserves) or 40/50 with two.
- What counts as debt: lenders include the new housing payment plus recurring obligations such as installment loans (Fannie Mae counts those with more than ten payments left), revolving accounts like credit cards, lease payments, and alimony or child support.
Here is how the rule you choose changes the answer for the example household:
| DTI rule | Housing budget / mo | Max home price | Limit that applies |
|---|---|---|---|
| Conventional 28/36 | $2,333 | $311,356 | Front-end |
| FHA 31/43 | $2,583 | $342,908 | Front-end |
| Aggressive 36/43 | $3,000 | $395,497 | Front-end |
A higher ratio buys a bigger house but leaves less room for everything else. The 28/36 default is the conservative choice; the looser limits are what some loans permit, not a target.
Down payment options
You don’t need 20% down to buy a home, but the amount changes both the price you can reach and whether you pay mortgage insurance:
- Conventional, 3% down: some lenders offer conventional loans with 3% down. Below 20% down you will typically pay PMI.
- FHA, 3.5% down: the minimum investment for borrowers with credit scores of 580 or higher. FHA requires mortgage insurance on every loan, whatever the down payment.
- VA, 0% down: for eligible veterans, service members and surviving spouses. There is no monthly mortgage insurance, but there is usually an upfront funding fee.
- USDA, 0% down: for low- and moderate-income buyers in eligible rural areas, with an upfront fee and ongoing mortgage insurance premiums.
| Down payment | Max home price | Share of price | PMI / mo |
|---|---|---|---|
| $0 | $275,563 | 0% | $114.82 |
| $10,000 | $284,511 | 3.5% | $114.38 |
| $20,000 | $293,459 | 6.8% | $113.94 |
| $40,000 | $311,356 | 12.8% | $113.06 |
| $60,000 | $329,252 | 18.2% | $112.19 |
| $80,000 | $361,977 | 22.1% | None |
| $100,000 | $379,757 | 26.3% | None |
Closing costs and cash reserves
The down payment isn’t the only cash you need. The CFPB says closing costs typically run 2% to 5% of the purchase price, separate from the down payment. On a $311,356 home that is $6,227 to $15,568, so the example buyer should plan on $46,227 to $55,568 in total at closing. Down payment and closing cost assistance programs may help cover it.
Keep a cushion after closing, too. The CFPB suggests setting aside money for moving costs, renovations and furnishings plus an emergency cushion, usually three to six months of expenses. Lenders may also require reserves, especially when your DTI is on the high side.
Why what you can afford isn’t what you’ll be approved for
This calculator estimates a ceiling from income and debts. A lender’s decision also depends on things it can’t see:
- Credit history and score, which affect your rate, your mortgage insurance cost and which programs you qualify for.
- Documented, stable income. Lenders count income they can verify and expect to continue.
- The property itself: the appraisal, its condition and, for condos, the building’s finances.
- Assets and reserves left after the down payment and closing costs.
The reverse matters just as much: a lender approving you for a price doesn’t make it comfortable. DTI ignores taxes on your paycheck, retirement saving, childcare and other goals. Check the payment against your take-home pay with our paycheck calculator, look at the full cost of a specific home with the mortgage calculator, and if you’re undecided, compare the long-run cost with the rent vs. buy calculator. A preapproval from a lender gives you a firm number to shop with.
Frequently asked questions
How much house can I afford with a $100,000 salary?
About $311,356, assuming $40,000 down, $500 of other monthly debts, a 7.03% 30-year fixed rate, 1% property tax and $1,800 a year for insurance. The 28% housing limit leaves $2,333 a month for principal, interest, taxes, insurance and PMI. With more debts, less cash or a higher rate the answer drops, so enter your own numbers above.
What is the 28/36 rule?
The 28/36 rule is a traditional lending guideline: spend no more than 28% of gross monthly income on housing (the front-end ratio) and no more than 36% on housing plus all other debt payments (the back-end ratio). On $100,000 a year that is $2,333 a month for housing and $3,000 for all debts. It is a rule of thumb, not a legal limit.
What debt-to-income ratio do mortgage lenders allow?
It depends on the loan. Fannie Mae allows a total DTI of up to 36% on manually underwritten loans, up to 45% for borrowers who meet its credit score and reserve requirements, and up to 50% for loans approved through its Desktop Underwriter system. FHA’s manual-underwriting benchmark is 31% for housing and 43% for total debt, rising to as much as 40/50 with documented compensating factors.
Should I use gross income or take-home pay?
Use gross income, before taxes and deductions, because that is how lenders calculate debt-to-income ratios. Your take-home pay is lower, so a payment that fits a lender’s ratio can still feel tight. Compare the monthly payment this calculator shows with your actual net pay and other goals, like retirement savings and childcare, before settling on a budget.
How much do I need for a down payment?
Less than many people think. Some lenders offer conventional loans with 3% down, FHA loans require at least 3.5% for borrowers with credit scores of 580 or higher, and VA and USDA loans can require no down payment for eligible borrowers. On a conventional loan, putting down less than 20% usually means paying private mortgage insurance until you build equity.
How do interest rates affect how much house I can afford?
Higher rates shrink your budget because more of the same monthly payment goes to interest. For a household earning $100,000 with $40,000 down and $500 of monthly debts, a 30-year rate of 8.03% instead of 7.03% lowers the maximum price from $311,356 to $289,751, a drop of $21,604. A rate one point lower raises it to $335,947.
Does this calculator include closing costs?
No. Closing costs are paid in cash at closing and don’t affect the debt-to-income limits, so they are shown separately. The CFPB says they typically run 2% to 5% of the purchase price, which is $6,227 to $15,568 on a $311,356 home. Budget for them on top of your down payment.