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Mortgage Affordability Calculator

Find out how much house you can afford based on your income, debts, and down payment. Uses the standard 28/36 qualifying ratios used by lenders.

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Enter your income, debts, and loan details, then click Calculate to see how much house you can afford.

How Mortgage Affordability Works

Understanding Mortgage Affordability

This calculator uses the industry-standard 28/36 qualifying ratios to determine the maximum home price you can afford. These are the same guidelines most lenders use when deciding whether to approve a mortgage application.

The 28/36 Rule Explained

The front-end ratio (28%) limits your housing costs to 28% of your gross monthly income. This includes your mortgage payment of principal and interest. The back-end ratio (36%) limits your total monthly debt obligations to 36% of your gross monthly income. This includes your housing payment plus all other recurring debts like car loans, student loans, and credit card minimums.

How the Calculation Works

First, the calculator determines two payment limits:

  • Front-end limit: Monthly income multiplied by 0.28
  • Back-end limit: Monthly income multiplied by 0.36, minus your existing monthly debts

The lower of these two amounts becomes your maximum monthly housing payment. From that payment, the calculator works backward using your interest rate and loan term to determine the maximum loan amount, then adds your down payment to find the maximum home price.

The Loan Amount Formula

The maximum loan is calculated using the present value of an annuity formula: Loan = Payment multiplied by [(1 + r)^n minus 1] divided by [r multiplied by (1 + r)^n], where r is the monthly interest rate and n is the total number of payments.

Important Considerations

This calculator provides an estimate based on income and debt ratios. Your actual approval may vary based on credit score, employment history, property type, property taxes, homeowners insurance, PMI, and other factors. Most lenders also require a minimum credit score and stable employment history.

Frequently asked questions

Mortgage affordability is determined using the 28/36 rule. The front-end ratio says your monthly housing payment should not exceed 28% of your gross monthly income. The back-end ratio says your total monthly debt payments (housing plus existing debts) should not exceed 36% of gross monthly income. The calculator uses the lower of these two limits to determine your maximum affordable payment.

The 28/36 rule is a guideline used by most lenders to determine how much you can borrow. The "28" means your mortgage payment (principal, interest, taxes, insurance) should be no more than 28% of your gross monthly income. The "36" means your total monthly debts (mortgage plus car payments, student loans, credit cards, etc.) should be no more than 36% of gross monthly income.

The amount of house you can afford depends on your income, existing debts, down payment, interest rate, and loan term. As a rough guide, many financial experts suggest buying a home that costs 2.5 to 3 times your annual gross income. However, using this calculator with your specific numbers will give you a more accurate and personalized answer based on the 28/36 qualifying ratios.

To afford a more expensive home, you can: increase your income, pay off existing debts to lower your back-end ratio, save a larger down payment, shop for a lower interest rate, choose a longer loan term (30 years vs. 15), improve your credit score to qualify for better rates, or consider a less expensive area. Reducing monthly debts like car payments or student loans has an immediate impact on how much you can borrow.

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