What is the 28/36 rule?

A guideline that housing costs should stay under 28% of gross monthly income and all debt payments under 36%. Many loan programs allow more, but these ratios leave room for savings and repairs.

Should I buy at the maximum I qualify for?

Not necessarily. Lenders don't count childcare, commuting, repairs or savings goals. The conservative figure is the safer place to shop, especially for a distressed home that may need work.

How does the loan type change what I can afford?

Loan programs set different debt-to-income guidelines. Conventional loans commonly start from 28% for housing and 36% for all debts, FHA from 31% and 43%, USDA from 29% and 41%, and VA looks mainly at a 41% total ratio plus residual income. Lenders can approve higher ratios with compensating factors, so check with yours.

Does the result include PMI or mortgage insurance?

No. With less than 20% down on a conventional loan you'll usually pay PMI, and FHA, USDA and VA loans carry their own insurance premiums or fees. Those costs come out of the same housing budget, so the price you can afford will be somewhat lower.

Buying a home

Home Affordability Calculator

Work backward from your budget. This calculator applies the debt-to-income limits most lenders start from (28% of gross income for housing, 36% for all debts) and tells you the home price, loan and monthly payment those limits support, with a conservative and a stretch figure.

You can comfortably afford

$304,369

Stretch budget at 43% DTI: $390,727

Your income is the limit here (28% front-end ratio), not your other debts.

Find homes in your budget

See homes up to $300,000 →

$2,100per month

Principal & interest: $1,671
Property tax: $279
Homeowner's insurance: $150
HOA: $0
Loan amount: $264,369
Down payment: 13.1% of price

How affordability is calculated

The formula

Front-end (housing) limit

Front-end budget = Gross monthly income × Front-end limit

Gross monthly income: Annual income before taxes ÷ 12, for all borrowers combined
Front-end limit: The share of income the selected loan type allows for housing (28% by default)

Back-end (total debt) limit

Back-end budget = (Gross monthly income × Back-end limit) − Monthly debts

Back-end limit: The share of income the selected loan type allows for all debts, housing included (36% by default)
Monthly debts: Car payments, student loans, card minimums and other recurring debt payments

Maximum housing payment

Housing payment = The lower of the front-end and back-end budgets

Principal and interest you can carry

P&I = Housing payment − Price × Tax rate + Annual insurance12 − HOA

Tax rate: Annual property tax as a percentage of the price
HOA: Monthly homeowners association dues

Loan the payment supports

Loan = P&I × 1 − (1 + r)⁻ⁿr

r: Monthly interest rate: the annual rate ÷ 12, as a decimal
n: Number of monthly payments: the term in years × 12

Home price

Price = Loan + Down payment

Down payment: The cash you plan to put toward the purchase

The calculator starts from two debt-to-income tests, using the selected loan type's limits (28% for housing and 36% for all debts by default). The front-end test caps the housing payment as a share of income; the back-end test caps housing plus your other debts. Whichever gives the smaller payment sets your budget, and the results tell you whether your income or your existing debts are the limit. Where a loan type sets only a back-end limit, as VA does, only that test applies.

Property tax, insurance and HOA dues come out of that housing budget first. Because property tax rises with the price, the calculator solves for the price and the tax together, then turns the payment that's left into the largest loan it can repay at your rate and term. Your down payment on top of that loan gives the price.

The stretch figure applies a higher total debt limit (43% in the default setting), closer to the ceiling some lenders allow with strong credit or cash reserves. The payment does not include mortgage insurance or loan program fees, and actual approval limits vary by lender and loan program.

Results are estimates for planning, not a loan offer or financial advice. Lenders, title companies and local rules set the actual figures.

Terms used in this calculator

Debt-to-Income Ratio (DTI)Mortgages & financingDebt-to-income ratio (DTI) is the share of your gross monthly income that goes to debt payments. Lenders use it to decide how large a mortgage payment you can afford.Mortgage Pre-ApprovalMortgages & financingA mortgage pre-approval is a lender's conditional commitment to lend up to a set amount, based on verified income, assets and credit. Sellers often expect one before accepting an offer.Down PaymentMortgages & financingA down payment is the part of a home's purchase price the buyer pays upfront in cash rather than borrowing. It is usually stated as a percentage of the price and is due at closing.PITIMortgages & financingPITI stands for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use it to judge whether a borrower can afford a home.MortgageMortgages & financingA mortgage is a loan used to buy real estate, secured by the property itself. If the borrower stops paying, the lender can take the property through foreclosure to recover what is owed.Private Mortgage Insurance (PMI)Mortgages & financingPrivate mortgage insurance (PMI) protects the lender, not the borrower, if a borrower defaults on a conventional loan. It is usually required when the down payment is less than 20% of the home's value.Closing CostsBuying & closingClosing costs are the fees and prepaid expenses paid to complete a real estate purchase, beyond the price and down payment. Buyers typically pay about 2% to 5% of the loan or purchase price.Loan-to-Value Ratio (LTV)Mortgages & financingLoan-to-value ratio (LTV) compares the size of a mortgage with the property's value. A lower LTV means more equity and less risk for the lender, which often brings better loan terms.

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Frequently Asked Questions

Guides to read next

How Much House Can You Afford?Guide · 6 min readThe right price is the one you can pay every month without strain and still keep savings for repairs and emergencies. This guide shows how lenders measure affordability, what they leave out, and how to build a budget that works for you.How to Get Pre-Approved for a MortgageGuide · 7 min readA pre-approval tells you, and the sellers you make offers to, how much a lender is prepared to lend after checking your income, assets and credit. This guide explains how it differs from pre-qualification, what to gather, how to compare lenders and what can change the answer before closing.Check Your Finances Before You Buy: Credit, Debt and Cash ReservesGuide · 7 min readYour credit, debts and savings decide which loans you can get, how much you can offer and how much room you have for surprises. Checking them before you shop gives you time to fix problems. This guide covers credit reports, debt-to-income, cash to close and the extra reserves distressed properties call for.

More calculators

Mortgage CalculatorMonthly payment with taxes, insurance, PMI and an amortization schedule.Debt-to-Income Ratio CalculatorFront-end and back-end DTI, the way lenders measure it.Rent vs. Buy CalculatorThe total cost of owning versus renting over your time in the home.

Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.