How Much House Can I Afford?
Before you fall in love with a listing, it helps to know your real budget. The most widely used guideline is the 28/36 rule. This guide explains it, walks through an example, and shows how to turn a monthly budget into a target home price. Enter your numbers below to get a target price, then test it in the full mortgage calculator.
Affordability calculator
The worked example below uses $450/mo; varies a lot by area.
The rule of thumb: keep your housing payment ≤ 28% of gross monthly income, and total debt ≤ 36%. Within those limits, a mortgage usually stays comfortable.
What the 28/36 rule means
- The 28% (front-end ratio): your total monthly housing payment (principal, interest, taxes, insurance, plus PMI and HOA) should be no more than 28% of your gross (pre-tax) monthly income.
- The 36% (back-end ratio): all your monthly debt payments combined (housing plus car loans, student loans, credit card minimums, and so on) should stay at or below 36%.
Lenders use similar debt-to-income limits when deciding how much to approve, so this rule roughly mirrors what you'll actually qualify for.
A step-by-step example
Say you earn $90,000 a year, about $7,500 a month before tax.
| Step | Calculation | Result |
|---|---|---|
| Gross monthly income | $90,000 ÷ 12 | $7,500 |
| Max housing payment (28%) | $7,500 × 0.28 | ~$2,100/mo |
| Less taxes & insurance (est.) | −$450/mo | ~$1,650 for P&I |
| Loan that $1,650 supports (6.5%, 30-yr) | n/a | ~$261,000 |
| With 20% down → home price | $261,000 ÷ 0.80 | ~$325,000 |
So on a $90,000 salary, a home around $325,000 keeps you inside the 28% guideline, assuming a 20% down payment and no unusually high other debts. Change any of those and the number moves.
Reproducing the example in the calculator
That table rounds each step. The calculator above carries the arithmetic through unrounded, so the same inputs give a precise number: enter $90,000 income, $0 other debts, $65,000 down, 6.5%, 30 years, and $450 taxes and insurance, and it returns ~$326,048. Four steps:
- $90,000 ÷ 12 = $7,500 gross monthly income.
- 28% of $7,500 = $2,100 for the whole housing payment; 36% = $2,700 for all debt combined. With no other debts, the 28% cap binds.
- $2,100 − $450 of taxes and insurance = $1,650 for principal and interest.
- $1,650 a month at 6.5% over 360 months supports a loan of $261,048. Add the down payment and the target price is $326,048, on which $65,000 is 19.9% down.
The calculator leaves PMI out of that housing payment, so under 20% down the real ceiling sits lower than it prints. The PMI page shows how much lower.
What lenders count as debt
The 36% ratio is only as good as the debt list you feed it. Underwriters count the minimum required monthly payment on recurring obligations, not the balance and not what you choose to pay:
- Car loans and leases, for the payments still scheduled.
- Student loans, including deferred ones, where a payment is often estimated from the balance.
- Credit card minimums, even when you clear the statement in full each month.
- Personal loans, installment plans, and co-signed loans, where co-signing makes the debt yours.
- Court-ordered obligations such as child support and alimony.
Utilities, subscriptions, groceries, and insurance outside the escrowed mortgage items normally stay out of it, as do loans with only a few payments left. Because the ratio runs on gross income, taxes and retirement contributions are not subtracted either, which is one reason a payment inside 28% can still feel tight against take-home pay. The CFPB's explanation of debt-to-income covers how underwriters use the resulting figure.
On the $90,000 example the two caps meet at exactly $600 a month: below that the 28% cap binds and other debts cost nothing in buying power; above it, every dollar comes out of the housing budget. At $900 a month of other debts the housing budget drops to $1,800, P&I to $1,350, and the supported loan to $213,585, putting the target price at $278,585. A $300 car payment moved the reachable price by about $47,500.
What the down payment actually changes
In an affordability calculation the down payment does not touch the monthly budget. The budget sets the loan; the down payment sits on top of it. The $1,650 P&I budget supports a $261,048 loan at 6.5% over 30 years whatever you put down, so each extra dollar down moves the reachable price by a dollar:
| Down payment | Loan the budget supports | Target price | Down as % of price |
|---|---|---|---|
| $20,000 | $261,048 | $281,048 | 7.1% |
| $40,000 | $261,048 | $301,048 | 13.3% |
| $65,000 | $261,048 | $326,048 | 19.9% |
| $90,000 | $261,048 | $351,048 | 25.6% |
Two effects sit outside that table. Under 20% down, PMI joins the housing payment out of the same $2,100 cap, so the top rows read optimistically. And a larger down payment can earn a slightly better rate, raising the loan a budget supports. Twenty percent is where both stop working against you.
What changes your number
- Down payment: the biggest lever you control, dollar for dollar, as the table above shows.
- Interest rate: a 1% difference moves the price by roughly $25,000 to $30,000 on this budget.
- Other debts: a car loan or student loans eat into your 36% back-end room, lowering what's left for housing.
- Property taxes & insurance: these vary a lot by location; higher local taxes mean less room for principal and interest.
- Credit score: a stronger score earns a better rate, which stretches your budget further.
Afford vs. comfortable
The 28/36 rule tells you the maximum a lender is likely to be comfortable with, not necessarily what will feel good to live with. Many people deliberately aim below 28% to leave room for savings, retirement, travel, or emergencies. There's nothing wrong with buying less house than you qualify for; a smaller payment buys peace of mind.
The gap is structural. Approval works from gross income and the debts on a credit report, with no view of childcare, medical costs, commuting, a household planning to drop to one income, or the maintenance and repairs that arrive with ownership. A payment sized to the top of the guideline leaves nothing behind it for any of that, which is why an approval letter reads better as a ceiling than a recommendation.
Stress-testing your number
A target price computed at one set of assumptions is a single point, not a range. The calculator above recomputes as you type, so it is quick to see how far the answer travels when one input moves. Holding the same $1,650 P&I budget, 30-year term, and $65,000 down:
| Interest rate | Loan supported | Target price |
|---|---|---|
| 5.5% | $290,601 | $355,601 |
| 6.5% | $261,048 | $326,048 |
| 7.5% | $235,979 | $300,979 |
A one point rate move shifts the reachable price by roughly $25,000 to $30,000 on this budget. Three other inputs reward the same treatment: raise taxes and insurance from $450 to whatever your target area charges, enter the debts you expect to carry at closing rather than today's, and try the income figure without any bonus you cannot count on. A price that only works at the best value of every input at once is worth knowing about before an offer.
Work it backwards: in the mortgage calculator, try different home prices and down payments until the total monthly payment lands at or below your 28% target. That's your realistic price range.
Frequently asked questions
What is the 28/36 rule?
Keep your housing payment at or below 28% of gross monthly income, and all debt payments combined at or below 36%. It's a simple affordability guideline that roughly matches what lenders approve.
How much house can I afford on $90,000 a year?
Roughly a $325,000 home: the 28% rule caps your payment near $2,100/month, which supports about that price at 6.5% with 20% down. Your down payment, debts, and rate will shift it.
Does my down payment affect affordability?
A lot. More down means a smaller loan, a lower payment, possibly no PMI, and maybe a better rate, so you can afford a higher price for the same monthly budget.
More mortgage guides
- What's in a mortgage payment? (PITI, PMI & HOA)
- How much is PMI, and how do I remove it?
- 15- vs 30-year mortgage: which is right for you?
- Mortgage calculator FAQ
This guide is general information, not financial advice. Affordability depends on your full situation. Confirm with a lender.
A note on this site: unlike lender-run calculators, everything here runs in your browser. No signup, no lead forms, and nothing you type is uploaded. Try the full calculator.
The 28/36 rule is a common lender guideline, not law; see CFPB: debt-to-income ratio for how debt-to-income ratios are used in underwriting.
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