House Affordability Calculator

What Affordability Actually Measures

There are two entirely different questions hiding inside "how much house can I afford", and confusing them is the most expensive mistake on this page. The first is what a lender will approve — a mechanical test of your income against your debts. The second is what you can live with once tax, childcare, savings and everything else is paid. The first number is almost always larger.

This calculator answers both, on separate tabs. The income tab reproduces the lender's test, so you know the ceiling. The budget tab works backwards from a monthly figure you choose, so you can set the ceiling yourself. Most people are better served by starting on the second tab and using the first only to check they are inside the limit.

The 28/36 Rule, and Where It Comes From

The rule is two caps applied simultaneously to gross monthly income:

Whichever cap binds first sets the answer. With no other debts the 28% limit almost always binds. Add $1,500 of monthly car and student loan payments to a $10,000 monthly income and the back-end cap allows only $2,100 for housing instead of $2,800 — the same income now supports roughly $100,000 less house. That is the single most actionable fact on this page: clearing an instalment loan before applying can move the number more than a raise would.

The 28/36 figures are a long-standing conventional-lending convention rather than a law, which is why the dropdown also offers FHA and VA ratios and a range of flat percentages if your lender works to something else.

How This Calculator Works

It runs the standard mortgage payment formula backwards. Rather than asking what a known price costs each month, it asks what price a known monthly allowance supports.

The denominator is what one dollar of house price costs per month: the loan portion through the mortgage factor, plus the running costs that scale with the property's value. Divide the allowance by that and you have the price it supports. Mortgage insurance, where it applies, is added to the same denominator so it competes for the same allowance.

The budget tab uses the identical arithmetic with your chosen monthly figure in place of the ratio-derived one, and adds maintenance to the denominator when you include fees, since a self-imposed budget has to cover everything.

What Each Input Means

• Annual household income — gross, before tax, combining every borrower on the application. Lenders use gross, which is why the answer looks generous.
• Monthly debt payments — the recurring obligations a credit report shows: car, student and personal loans, minimum card payments, child support. Not groceries, utilities or phone.
• Down payment — enter as a percentage or a dollar amount. Below 20% on a conventional loan, private mortgage insurance is added at about 0.5% of the loan a year and counted in the ratio.
• Property tax, insurance, HOA — annual figures, as a percentage of the home's value or a fixed amount. Property tax varies enormously by location and is worth looking up rather than accepting a default.
• Debt-to-income ratio — the underwriting standard being applied. Conventional 28/36, FHA 31/43, VA around 41%, or a flat percentage if you know your lender's.
• Budget for house (budget tab) — what you have decided to spend monthly, which is a different and usually wiser starting point than what you qualify for.

Conventional, FHA and VA: What Changes

The three programs differ in the ratios they allow and, more importantly, in how they charge for the guarantee.

• Conventional — 28/36. No mortgage insurance at 20% down or more. Below that, PMI at roughly 0.5% of the loan a year, which stops once you reach 20% equity.
• FHA — more permissive ratios, typically 31/43, paid for with insurance: an upfront premium of 1.75% of the loan, plus an annual premium collected monthly. With 10% or more down that annual premium ends after eleven years; below 10% it lasts the life of the loan.
• VA — for eligible service members and veterans, commonly underwritten near 41%, with no monthly mortgage insurance at all. Instead there is a one-time funding fee at closing, which for first-time use is 2.15% of the loan under 5% down, 1.50% from 5%, and 1.25% from 10% down. Borrowers with a service-connected disability are generally exempt.

Two deliberate corrections worth stating. Calculator.net treats the VA funding fee as a monthly charge; it is a one-time fee with no ongoing component, so this calculator puts it in the closing costs where it belongs, which raises the affordable price relative to theirs. It also leaves FHA's monthly premium out of the front-end ratio, while FHA underwriting counts it; including it lowers the FHA figure here slightly. Every other number on this page reproduces theirs exactly.

The Budget Method, and Why It Often Wins

The second tab inverts the question. Instead of deriving a ceiling from your income, you name a monthly figure and it tells you what house that buys. It is the same arithmetic run from the other end, and for most buyers it is the more useful direction.

The reason is what the budget tab includes. Tick the fees option and the figure you name has to cover the mortgage, property tax, insurance, HOA dues and maintenance — estimated at 1.5% of the home's value a year, which on a $400,000 house is $500 a month that no lender ratio ever tests you against. That is roughly a fifth of a typical payment, and it is the line most first-time buyers discover after moving in rather than before.

A practical way to use the two together: find your qualifying ceiling on the income tab, then decide independently what you want to spend and check on the budget tab what it buys. If the second figure is comfortably below the first, you have room. If it is above, the lender's limit is not the constraint that matters.

The Gap Between Qualifying and Affording

Lender ratios are built to predict default, not comfort, and they are silent on almost everything that makes a monthly budget work. They use gross income, so income tax and payroll deductions never appear. They ignore retirement contributions, childcare, tuition, commuting and medical costs. They cannot tell a stable salary from one that is half commission.

A household earning $120,000 gross might see $7,800 a month after tax and deductions. A $2,800 housing allowance is 28% of gross but nearer 36% of what actually arrives — and that is before maintenance, which pushes the true figure past 40%. Nothing has gone wrong in the arithmetic; the ratio was simply never measuring that.

This is why the number this page produces is best read as a ceiling to stay well below. Many financial planners suggest keeping total housing costs under about 25% of take-home pay, which is a materially stricter test than any lender applies. Running the income tab with your take-home figure instead of your gross is a quick way to see the difference.

What This Calculator Leaves Out

• Closing costs are an estimate. The 3% assumption is a reasonable middle; actual costs vary by state and lender and are itemised on your Loan Estimate.
• Rates are assumed fixed for the whole term. An adjustable-rate mortgage would change the payment later.
• Property tax is not static. Assessments rise, and in many places a sale triggers a reassessment at the new price.
• Insurance is volatile in some regions. Premiums in areas exposed to wildfire, flood or hurricane have moved sharply, and a percentage-of-value default may understate them badly.
• Approval is not guaranteed. Credit score, employment history, reserves and the appraisal all sit outside this arithmetic, and any of them can reduce or block an offer that the ratios permit.
• Maintenance at 1.5% is a rule of thumb. Older homes routinely cost more, and the spending is lumpy rather than monthly.

Whether buying beats renting is a separate question, and our rent calculator works out what you can reasonably pay each month. For the wider purchase picture, including closing costs and appreciation, see the real estate calculator.

Frequently Asked Questions

How much house can I afford on my income?

The usual starting point is the 28/36 rule: no more than 28% of gross monthly income on housing, and no more than 36% on all debt payments combined. On $120,000 a year that is $2,800 a month for housing, which at a 6.721% rate over 30 years with 20% down supports a house of around $409,000. The rule is a lender's screening test, not a budget, and it takes no account of childcare, savings goals or how secure your income is.

What is the 28/36 rule?

Two limits applied at once. The front-end ratio caps housing costs, meaning mortgage principal and interest plus property tax, insurance, HOA dues and any mortgage insurance, at 28% of gross monthly income. The back-end ratio caps that same housing figure plus every other monthly debt payment at 36%. Whichever limit binds first decides the answer, which is why paying down a car loan can raise the price you qualify for without your income changing at all.

What is included in the debt-to-income ratio?

Recurring monthly obligations that appear on a credit report: car loans, student loans, personal loans, minimum credit card payments, and court-ordered payments such as child support. Utilities, groceries, phone bills, insurance premiums other than the home's, and anything you pay for out of cash flow are excluded, which is a large part of why a lender's limit can feel comfortable on paper and tight in practice.

How much should I put down on a house?

Twenty percent is the level at which private mortgage insurance stops applying on a conventional loan, which is worth roughly half a percent of the loan a year until you reach it. Below that you can still buy, and this calculator prices the PMI in. The trade-off is real, though: a larger down payment lowers the monthly cost but takes cash out of your emergency fund, and being house-rich and cash-poor is its own risk.

What are FHA and VA loan limits based on?

They use different ratios and different fees rather than different arithmetic. FHA underwriting typically allows 31% front-end and 43% back-end, and charges an upfront mortgage insurance premium of 1.75% of the loan plus an annual premium collected monthly. VA loans, available to eligible service members and veterans, are commonly underwritten around 41% and charge a one-time funding fee instead, with no monthly mortgage insurance at all.

Does this include property tax and insurance?

Yes, and that is the main reason the figure here is lower than a bare mortgage calculator would suggest. Property tax, homeowners insurance and HOA dues are all counted inside the housing ratio, exactly as a lender counts them. Maintenance is estimated separately at 1.5% of the home's value a year and shown in the total monthly cost, but it is left out of the ratio because lenders do not test against it.

Why is the amount I qualify for more than I can comfortably spend?

Because a lender is measuring the risk of not being repaid, not whether your life still works afterwards. The ratios use gross income, so income tax and payroll deductions are invisible to them, and they ignore retirement contributions, childcare, tuition and how much of your income is a variable bonus. Treating the number here as a ceiling to stay well below, rather than a target to reach, is the sensible reading.

Should I use gross or net income for this calculation?

Gross, meaning income before tax and deductions, because that is what lenders use and this calculator is reproducing their test. It is also why the result can look generous. If you want a figure that reflects what actually reaches your account, run the calculation again using your take-home pay as the income; the answer will be markedly lower and considerably closer to what a month genuinely feels like.

This calculator provides estimates for general informational purposes only and is not financial, lending or tax advice. Results reproduce standard debt-to-income underwriting tests using the figures you enter; they are not an offer of credit, a pre-approval, or a guarantee that any lender will approve the amount shown. Closing costs, maintenance, mortgage insurance rates and loan-program terms are estimates and change over time. Confirm every figure with a lender and consider speaking with a qualified financial professional before committing to a purchase.