Home Affordability Calculator

How much house can I afford? Take the smaller of two monthly limits: your housing limit (for example 28% of gross monthly income) and your total debt limit (36%) minus your other debts. On a $100,000 salary with $500 of debts, that is $2,333.33 a month. With $40,000 down at an example 6.5% for 30 years, it buys about $320,242.

How to use the home affordability calculator

1. Choose how to set your budget: from your income and debts, or from a monthly payment you already have in mind.
2. Enter your gross (pre-tax) yearly income and the monthly payments on car loans, student loans, card minimums and other debts. Rent you will stop paying does not count.
3. Type your down payment in dollars or as a percent of the price, the interest rate from your own quote (6.5% is only an example) and the loan term.
4. Check the debt-to-income limits. The total debt limit starts at 36%; the housing limit of 28% is optional and can be cleared.
5. Open “Taxes, insurance, PMI and HOA” and enter your local figures. The answer, the payment breakdown, three budgets and a rate table update as you type.

Debt-to-income ratios: the limits lenders use

The Consumer Financial Protection Bureau defines your debt-to-income ratio (DTI) as all your monthly debt payments divided by your gross monthly income. Its example: $2,000 of payments on $6,000 of income is a DTI of 33%. The CFPB also notes that different loan products and lenders have different limits.

• Housing ratio (front-end): the full housing payment (principal, interest, property tax, insurance, PMI and HOA) ÷ gross monthly income.
• Total DTI (back-end): the housing payment plus all other debt payments ÷ gross monthly income.

For conventional loans sold to Fannie Mae, its Selling Guide sets the total DTI maximum at 36% for manually underwritten loans, up to 45% when the borrower meets its credit score and reserve requirements, and 50% for loans approved through its Desktop Underwriter system. The guide has no separate housing ratio. The popular “28/36 rule” comes from personal-finance guidance rather than an agency rule, so the calculator treats 28% as an adjustable example. FHA, VA and USDA loans have their own rules; ask your lender which limits apply to you.

Home affordability formula

The calculator works backward from the payment to the price. First it finds your monthly limit:

H = the smaller of (f × I) and (b × I − D)

where I is gross monthly income, D is your other monthly debts, f is the housing limit and b is the total debt limit. Then it solves for the loan L that makes the whole payment equal H:

L = (H − fixed costs − down × t) ÷ (k + t + m)

• k is the principal and interest on $1 of loan: r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), with r = yearly rate ÷ 12 and n = years × 12.
• t is property tax per $1 of price each month (yearly tax rate ÷ 12).
• m is PMI per $1 of loan each month, used only when the loan is more than 80% of the price.
• Fixed costs are the parts that do not grow with the price, such as insurance and HOA dues.

The home price is L plus the down payment. Because each part of a real payment is rounded to the cent, the calculator then checks whole-dollar prices and keeps the largest one that fits.

Worked example: $100,000 salary

A buyer earns $100,000, pays $500 a month on a car loan, has $40,000 for a down payment and is quoted an example rate of 6.5% for 30 years. Property tax is 1.2% of the price a year, insurance $1,500 a year and PMI 0.5% of the loan a year.

1. Gross monthly income: 100,000 ÷ 12 = $8,333.33.
2. Housing limit: 28% × 8,333.33 = $2,333.33. Total debt limit: 36% × 8,333.33 − 500 = $2,500.00. The smaller is H = $2,333.33.
3. Insurance is 1,500 ÷ 12 = $125.00, leaving $2,208.33.
4. Rates per dollar: r = 0.065 ÷ 12 ≈ 0.0054167, (1 + r)³⁶⁰ ≈ 6.9918, so k ≈ 0.006321; t = 0.012 ÷ 12 = 0.001; m = 0.005 ÷ 12 ≈ 0.000417.
5. Loan: (2,208.33 − 40,000 × 0.001) ÷ (0.006321 + 0.001 + 0.000417) ≈ $280,242. Price: 280,242 + 40,000 = $320,242.
6. Check: principal and interest $1,771.32 + tax $320.24 + insurance $125.00 + PMI $116.77 = $2,333.33.

Drop the 28% housing limit and use only the 36% total limit, and the same buyer reaches $341,784. At Fannie Mae’s 45% maximum the figure is $438,715, with a payment of $3,250 a month. Lenders may approve that, but it leaves much less room for everything else.

Worked example: when 20% down sets the ceiling

Now the buyer has $70,000 down and is quoted PMI of 1.5% a year. At $350,000 the loan is $280,000, exactly 80% of the price, so there is no PMI and the payment is $2,244.79. One dollar more makes the loan larger than 80%, and PMI of 1.5% on $280,001 adds $350.00 a month, which pushes the payment to $2,594.80, above the $2,333.33 limit. So the answer is exactly $350,000, five times the down payment. The calculator spots this jump and explains it in the steps.

How the interest rate changes what you can afford

With the monthly limit fixed, a higher rate means less loan for the same payment. For the first buyer:

That is roughly $12,000 of price for each half point, so getting Loan Estimates from more than one lender matters.

How much house can I afford on my salary?

These figures assume $500 of monthly debts, 10% down, an example 6.5% rate for 30 years, 1.2% property tax, $1,500 a year of insurance and 0.5% PMI.

Your own tax rate, insurance quote and debts can move these numbers a lot, so treat the table as a starting point and use the calculator for your case.

Common mistakes when estimating a home budget

• Using take-home pay. DTI limits are based on gross income. Your budget, though, is paid from take-home pay, so check the payment against what actually reaches your account.
• Forgetting tax, insurance and PMI. They can add hundreds of dollars a month and lower the price you can afford.
• Leaving out debts. A $400 car payment reduces your housing room by $400 under the total debt limit.
• Treating the maximum as the target. A lender’s limit is not a household budget. Leave room for savings, repairs and childcare.
• Spending the whole down payment. Closing costs and cash reserves come on top of it. Your Loan Estimate lists the closing costs.

Sources

All checked November 2026.

• CFPB: What is a debt-to-income ratio?
• Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios
• CFPB: What is private mortgage insurance?
• CFPB: When can I remove PMI from my loan?
• CFPB: What is a Loan Estimate?

Results are estimates, not financial advice or a loan approval. Lenders also review credit, savings, employment and the property.

Home affordability practice quiz: 10 questions

Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.

Frequently asked questions

How much house can I afford on $100,000 a year?

With $500 of monthly debts and 28% / 36% limits, the most you would spend on housing is $2,333.33 a month. With $40,000 down at an example 6.5% for 30 years with the example tax, insurance and PMI, that is about $320,242. Your rate, taxes and debts change the answer.

What is the 28/36 rule?

It is a rule of thumb: spend no more than 28% of gross monthly income on housing and no more than 36% on housing plus all other debts. Fannie Mae’s guide uses only the total ratio, with a 36% maximum for manually underwritten loans.

What debt-to-income ratio do lenders allow?

It depends on the loan. For conventional loans sold to Fannie Mae, the maximum total DTI is 36% for manual underwriting, up to 45% with strong credit and reserves, and 50% through its automated system. FHA and VA loans have their own rules.

What salary do I need for a $400,000 house?

With 10% down at an example 6.5% for 30 years, 1.2% property tax, $1,500 insurance and 0.5% PMI, the payment is $2,950.44 a month. To keep that at 28% of gross income you would need about $126,448 a year.

Does a bigger down payment raise what I can afford?

Yes. Each extra dollar down adds a dollar to the price, and the smaller loan lowers the payment. Reaching 20% down also removes PMI on a conventional loan.

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