Home Affordability Calculator
Determine your home buying budget based on the 28/36 rule.
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20 Years
15 Years
10 Years
Based on your finances, you can afford a home up to:
$0
Estimated Monthly Payment (P&I): $0
Total Monthly Housing (with Tax/Ins): $0
Total Monthly Housing (with Tax/Ins): $0
How Mortgage Affordability is Calculated
Lenders typically use the 28/36 rule to determine how much they are willing to lend you. This rule states that your total housing costs (Principal, Interest, Taxes, and Insurance) should not exceed 28% of your gross monthly income. Furthermore, your total debt obligations (including the new mortgage, car loans, and student loans) should not exceed 36% of your income.
Realistic Example
Suppose you earn $85,000 per year. Your gross monthly income is approximately $7,083. Under the 28% rule, your max housing payment should be roughly $1,983. However, if you have $400 in monthly car payments, the 36% rule ($2,550 total debt limit) would allow $2,150 for housing. Lenders usually take the lower of these two figures to stay conservative.
Factors That Impact Your Budget
- Interest Rates: Even a 1% increase in interest rates can reduce your buying power by tens of thousands of dollars.
- Down Payment: A larger down payment reduces the loan amount and eliminates Private Mortgage Insurance (PMI) if you reach 20%.
- DTI Ratio: Your Debt-to-Income ratio is the most critical factor for loan approval. Paying off small debts before applying can significantly boost your max home price.