Home Affordability Calculator

The short answer

• The classic rule: housing costs up to 28% of gross income, and all debts up to 36%.
• On $100,000 a year with $500 of other debts and $40,000 down at 7.25%, that buys a home of about $306,360.
• FHA’s standard 31/43 limits raise that to about $337,333.
• A lower rate, a bigger down payment or fewer debts all raise the price; property tax and HOA dues lower it.

Debt-to-income ratios

Lenders use two ratios, both against your gross (before-tax) monthly income:

• Front-end ratio: the full housing payment (principal, interest, property tax, insurance, mortgage insurance and HOA dues) divided by gross income.
• Back-end ratio: the housing payment plus every other monthly debt payment, divided by gross income.

The CFPB explains these ratios in plain terms. Our debt-to-income ratio calculator works out your current ratios.

The 28/36 rule

The 28/36 rule is the long-standing guideline: spend no more than 28% of gross income on housing, and no more than 36% on all debts including housing. It is not a law, and many loans allow more, but it is a sensible place to start because it leaves room for taxes, saving and everyday costs.

On $100,000 a year, gross income is $8,333 a month. 28% of that is $2,333; 36% is $3,000.

A worked example

The calculator finds the highest price whose full payment fits both limits. Because property tax and PMI grow with the price, it searches rather than working backward from a single formula.

Which limit binds

Only one limit decides your price: whichever leaves the smaller housing payment. With few debts, the housing limit binds. Once other debts pass 8% of gross income (the gap between 28% and 36%), the all-debts limit takes over.

In the example, raising other debts from $500 to $1,000 a month cuts the all-debts room to $2,000. That limit now binds and the price falls to $265,064, $41,296 less.

28/36, 43% and FHA limits

In the example, 28/43 gives the same price as 28/36 because the 28% housing limit binds either way. A higher all-debts limit only helps if you carry a lot of other debt.

Fannie Mae’s Selling Guide sets a 36% maximum for manually underwritten loans, up to 45% with strong credit and reserves, and up to 50% for loans approved through its Desktop Underwriter system. FHA loans start from 31% and 43% under HUD’s handbook, and allow more with compensating factors such as cash reserves. Being allowed 50% is not the same as being comfortable at 50%.

Price by income

At 28/36, with $500 of other debts, $40,000 down and 7.25% over 30 years:

At $60,000, the $500 of debts is 10% of income, so the all-debts limit binds and leaves $1,300 for housing instead of $1,400.

What the rate does

The same payment buys less house when rates rise. Freddie Mac’s survey put the average 30-year rate at about 7.3% on October 1, 2026. On $100,000 a year:

Each half point costs about $10,500 to $13,000 of buying power here. A better credit score, which earns a lower rate, is worth real money.

What a bigger down payment does

Each extra $20,000 down adds about $18,000 to the price, because property tax rises with the price. The jump from $60,000 to $80,000 is bigger, $32,208, because 20% down removes PMI and frees that money for the loan.

Paying off debt first

If the all-debts limit binds, every dollar of monthly debt you clear adds a dollar of housing payment. In the example with $1,000 of debts, clearing them raises the price from $265,064 to $306,360. Paying off a small car loan or card balance before applying can be worth more than saving the same cash for the down payment. Our debt payoff calculator helps plan it.

Property tax, insurance and HOA

Costs that do not repay the loan still count in the payment. Doubling the property tax rate from 1% to 2% cuts the example price from $306,360 to $277,691. A $300 monthly HOA fee cuts it to $269,194. Two similar homes in neighboring towns can be very different purchases once tax and dues are counted.

15-year vs 30-year

A 15-year loan builds equity fast and costs far less interest, but the higher payment buys less house. At about 6.6% over 15 years, the example price is $254,653, compared with $306,360 on a 30-year loan at 7.25%.

What counts as income

Lenders use stable, documented income, usually with a two-year history: salary and wages, regular overtime and bonuses, self-employment income after expenses (from your tax returns), Social Security, pensions, alimony and child support you receive. Income from a new job or side gig may count only partly, or not until it has a track record.

What counts as debt

• Car, student and personal loan payments, including deferred student loans (lenders use a set payment).
• Minimum credit card payments, even if you pay in full each month.
• Child support and alimony you pay.
• Not counted: rent you will stop paying, utilities, phone, insurance and groceries.

Approved vs comfortable

Ratios use gross pay, but you live on take-home pay. On $100,000 a year, federal tax, Social Security, Medicare, state tax and retirement savings take a large share. Check the payment against your real paycheck with our paycheck calculator, and remember repairs, utilities and furnishing a bigger home.

Cash beyond the down payment

You also need closing costs, often several thousand dollars, plus moving, any immediate repairs and an emergency fund. Some lenders want reserves of a few months’ payments left in the bank after closing. Do not put every dollar into the down payment.

Credit score and approval

Your credit score sets your rate and PMI cost, and can decide which loan programs you qualify for. FHA loans accept lower scores. Before applying, check your credit reports for errors, keep card balances low, and avoid opening new credit.

Steps before you shop

1. Work out your price range here, then check the payment against your take-home pay.
2. Get preapproved by two or three lenders and compare Loan Estimates.
3. Look up property tax and HOA dues for each home you like.
4. Use our mortgage calculator on a specific listing.

Using the calculator well

Enter household income before tax, every monthly debt payment and your down payment. Use a real rate quote. Under More options, choose 28/36, 28/43, FHA’s 31/43 or your own limits, and enter local property tax, insurance and HOA dues. The results show each rule side by side and what a bigger down payment would change.

Two incomes and co-borrowers

When two people apply together, lenders add both incomes and both sets of debts. That usually raises the price you can afford, but both borrowers are fully responsible for the whole loan, and both credit histories count. Some lenders price the loan from the lower of the two middle credit scores, so one weaker score can raise the rate for both of you.

If only one of you will be on the loan, enter only that person’s income and debts. Income from a partner who is not on the loan does not count toward the ratios, even if they will help with the payment.

If you are self-employed

Lenders usually average the last two years of self-employment income from your tax returns, after business expenses. Writing off a lot of expenses lowers your tax bill, but it also lowers the income a lender can use. If your income is rising, the two-year average can understate what you earn now; if it is falling, lenders may use the lower recent year. Enter the figure from your returns rather than your gross sales.

Student loans and your ratios

Student loan payments count as debt even when they are deferred or in forbearance. Rules differ by loan program: some lenders use your actual income-driven payment, and others use a set share of the balance when the payment shown is zero. A large balance on a low income-driven payment can therefore count for more than you pay. Ask each lender how it treats your loans, and enter the figure it will use. Our student loan calculator shows the standard payment.

Costs that rise after you buy

A fixed-rate mortgage keeps principal and interest the same, but the rest of the payment tends to rise. Property tax is often reassessed after a sale and can climb as values rise. Insurance premiums have been rising quickly in many states. HOA dues can go up, and special assessments can arrive with little warning. Build in room for these increases rather than buying at the very top of your range.

Owning also brings costs a landlord used to cover: a new roof, a water heater, appliances, lawn care and pest control. Many owners set aside a little each month in a separate account so a repair does not go on a credit card.

Renting while you save

If the price you can afford does not match the homes you want, renting for another year or two while you pay down debt and build a bigger down payment can change the numbers a lot. In the example, adding $40,000 to the down payment and clearing $500 of monthly debts would both raise your budget. Our rent affordability calculator shows what rent fits while you save.

State and local first-time buyer programs can also help with the down payment or closing costs, often as a grant or a low-cost second loan. Your state housing finance agency lists what is available.

Prequalification vs preapproval

A prequalification is a quick estimate from figures you give the lender, much like this calculator. A preapproval goes further: the lender checks your credit and documents such as pay stubs, W-2s, bank statements and tax returns, and states how much it is willing to lend. Sellers take preapproved buyers more seriously, and the process often reveals problems early, such as an error on a credit report or a debt you forgot to count.

A preapproval is not a final approval. The lender will still appraise the home and recheck your income and credit before closing, so avoid new debt, large unexplained deposits and job changes until the keys are in your hand.

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