This home affordability calculator estimates the most expensive home you can buy with your income, existing debts and down payment. It works backwards from the monthly payment lenders are likely to accept, including property taxes, insurance and PMI, not just the loan.
How it works
Lenders often use the 28/36 rule:
- Front-end ratio: housing costs up to 28% of your gross monthly income.
- Back-end ratio: housing plus all other debts up to 36%.
The calculator takes whichever limit is lower and finds the home price whose full monthly payment fits within it.
Example: $90,000 a year
With a gross income of $90,000 ($7,500 a month), $400 a month in other debts and $40,000 saved for the down payment, at 6.5% over 30 years:
- 28% of income allows $2,100 a month for housing.
- 36% minus debts would allow $2,300, so the 28% rule is the limit.
- That points to a home of about $290,000.
Paying off the $400 car loan wouldn’t raise this figure, because the 28% rule is the one setting the limit. A bigger down payment or a lower rate would.
For guidance only, not financial advice.