Home Affordability Calculator
Knowing how much home you can afford before you start shopping is one of the most important steps in the homebuying process. Lenders and financial planners use the 28/36 rule as a foundational guideline: your total monthly housing costs (mortgage principal and interest, property taxes, and homeowner's insurance, collectively called PITI) should consume no more than 28% of your gross monthly income. Your total monthly debt load, including the housing payment plus car loans, student loans, and minimum credit card payments, should stay at or below 36% of gross monthly income. This calculator applies both constraints and returns the more conservative result as your maximum monthly payment. From that figure, it works backwards through the mortgage amortisation formula to estimate the maximum loan you can support, then adds your down payment to estimate the maximum home price. The debt-to-income (DTI) ratio output tells you where you stand relative to both thresholds. Remember that qualifying ratios tell you the maximum a lender may approve; a more comfortable target is often 10% to 15% of gross income for housing costs, leaving room for savings, emergencies, and other priorities.
Max monthly payment: -- | Max home price: --
How the 28/36 rule works
The 28/36 rule has been a standard in mortgage underwriting for decades. The first number (28) caps your front-end ratio: total housing costs (PITI) as a percentage of gross monthly income. The second number (36) caps your back-end ratio: all monthly debt payments as a percentage of gross monthly income.
Lenders use both constraints and approve you based on the more restrictive one. If your income allows a $2,240 housing payment (28%) but your existing debts push total DTI above 36% at that payment level, the lender will reduce the allowable housing payment until total DTI reaches 36%.
Affordability formula
The maximum mortgage loan is calculated using the standard present value of annuity formula:
Loan = P × ((1 - (1 + r)^-n) / r)
Where P is the maximum monthly payment, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years multiplied by 12). The maximum home price equals the loan amount plus your down payment.
Home affordability: frequently asked questions
What is the 28/36 rule for buying a home?
The 28/36 rule is a widely used guideline lenders apply when evaluating mortgage applications. It states that your monthly housing costs (principal, interest, property taxes, and insurance) should not exceed 28% of your gross monthly income, and your total monthly debt obligations should not exceed 36% of your gross monthly income. Many lenders now allow higher ratios, but 28/36 is a conservative and financially sound target.
What counts as monthly debt in the 36% calculation?
Total monthly debt includes all recurring debt payments: your proposed mortgage payment (PITI), car loans, student loans, minimum credit card payments, personal loans, child support, and alimony. Monthly living expenses such as groceries, utilities, and subscriptions do not count.
How does down payment affect how much home I can afford?
A larger down payment reduces the loan amount, which lowers your required monthly mortgage payment. This allows you to qualify for a higher-priced home within the same income constraints. Additionally, a down payment of 20% or more typically eliminates the need for private mortgage insurance (PMI), further reducing your monthly cost.
Does the calculator include property taxes and insurance?
The max monthly payment shown is based on the 28% gross income rule applied to all housing costs (PITI). For simplicity, this calculator estimates the mortgage payment portion. You should budget approximately 1% to 1.5% of the home value annually for property taxes and insurance combined, which reduces the loan amount you can support.
Can I afford a home if my DTI is above 36%?
Many mortgage programmes allow DTI ratios up to 43% or even 50% (FHA loans). However, a higher DTI increases financial risk and monthly stress. Lenders may still approve you, but it is prudent to keep housing costs below 28% of gross income to maintain financial flexibility for emergencies, retirement savings, and other goals.
References
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. This calculator is for informational purposes only and does not constitute financial or mortgage advice. See our methodology.