How Much House Can You Afford?
Before falling in love with a listing, run the lender’s math. Banks decide how much you can borrow
using debt-to-income (DTI) ratios — and the classic guideline is the 28/36 rule:
spend no more than 28% of your gross monthly income on housing, and no more than 36% on all debts
combined. This calculator applies both limits, subtracts your existing debts, and solves for the
home price your budget supports at today’s rates.
How the calculation works
First, your maximum monthly housing budget is the lower of two numbers: 28% of gross monthly
income, or 36% of gross monthly income minus your current monthly debts (car loans, credit cards,
student loans). If you carry $500/month of debts on a $100,000 salary, the back-end rule leaves
$3,000 − $500 = $2,500 for housing, while the front-end rule allows $2,333 — so $2,333 is
your budget. The calculator then works backwards: it finds the home price whose principal &
interest, property taxes, insurance, and HOA dues exactly consume that budget.
Why your debts matter as much as your income
Once your existing debts push you past the front-end limit, lenders subtract them dollar-for-dollar
from your housing budget — and at a 7% rate, every $100/month of debt payments above that point
costs you roughly $15,000 of home price. A $500 car payment can therefore shrink the home you qualify
for by tens of thousands of dollars. That is why paying off a car loan or credit card before house
hunting often increases your buying power more than a small raise. Try zeroing out the debts field
above to see the difference on your own numbers — it is frequently the single biggest lever
buyers control.
Lender limits are a ceiling, not a target
The 28/36 rule tells you what a lender will approve, not what will feel comfortable. It ignores
childcare, savings goals, travel, and the simple fact that houses need maintenance (budget about
1% of the price per year). Many buyers are happiest targeting a payment closer to 25% of take-home
pay. Use the result here as your maximum, then sanity-check it against your real monthly budget.
Once you have a target price, run it through our
mortgage calculator
for the full amortization schedule and extra-payment scenarios.
Front-end and back-end ratios
Lenders actually run two ratios. The front-end ratio is your monthly housing costs
(principal, interest, taxes, insurance, HOA) divided by gross monthly income. The back-end
ratio adds every other recurring monthly debt — car loans, student loans, minimum credit-card
payments, child support — on top of housing. You must pass both, which is why this calculator takes
the lower of the two budgets. (Not sure of your exact ratios? Run them through our
debt-to-income calculator first.) Lowering either ratio before you apply — by paying down debts or
saving a bigger down payment — directly increases the loan a lender will offer.
FHA and VA loans use different limits
Government-backed loans are more flexible. FHA loans allow a 31% front-end and 43%
back-end ratio, in exchange for mortgage insurance: a 1.75% upfront premium plus an annual premium.
VA loans, for veterans and active service members, skip the front-end ratio entirely
and use a single 41% back-end limit, with a funding fee instead of monthly mortgage insurance. Use the
Loan Type Preset above to run your numbers under each program’s rules. Whichever program you choose,
borrowing with a down payment under 20% normally means paying for mortgage insurance — this
calculator adds an estimated 0.5% per year automatically in that case, so the price it shows stays realistic.
If the result is lower than you hoped
Affordability is not fixed — five levers move it, roughly in order of impact:
- Reduce other debts — every $100/month you free up adds roughly $15,000 of buying power at a 7% rate.
- Save a bigger down payment — it raises the price directly and can remove mortgage insurance.
- Improve your credit score — a lower interest rate stretches the same budget to a higher price.
- Build savings — lenders treat cash reserves as a compensating factor when ratios are borderline.
- Grow your income — the slowest lever, but the most powerful one, since both ratios scale with it.
And if none of these close the gap yet, renting while you work on them is a legitimate plan, not a
failure — buying the wrong house at the wrong time costs far more than a year of rent. In the
meantime, our rent calculator
shows how much rent your income can carry comfortably.
FAQ
How much house can I afford on a $100,000 salary?
About $2,333/month in housing costs by the 28/36 rule — roughly a $350,000 home with 20% down at a 7% rate and typical taxes. Change the defaults above to match your debts and local costs.
What DTI ratios do FHA and VA loans use?
FHA loans use 31% front-end and 43% back-end ratios, plus mortgage insurance premiums. VA loans use a single 41% back-end ratio with no front-end limit. Pick either from the Loan Type Preset to see your price under those rules.
What is the 28/36 rule?
A lender guideline: housing costs ≤ 28% of gross monthly income, and total debts ≤ 36%. Some lenders allow higher ratios with strong credit and reserves, which is why the ratios above are editable.
Does a bigger down payment raise my affordable price?
Yes — it shrinks the loan and the monthly payment, so the same budget supports a higher price. It can also eliminate PMI. Compare a few down-payment sizes above to find your sweet spot.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial
advice or a lending decision. Actual approvals, rates, taxes, and insurance vary by lender, location, and
credit profile. Consult a licensed mortgage professional for figures specific to your situation.