How Much House Can I Afford?
The home price your income supports, by the rule lenders use.
Good to know. What a bank will lend and what feels comfortable every month are two different numbers.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Your monthly budget for housing is the lower of two limits: 28% of your gross monthly income, or 36% of it minus your other debt payments. The calculator finds the price whose full monthly cost (loan, property tax, insurance and fees) exactly fills that budget.
The formula
Budget = min(income ÷ 12 × 28%, income ÷ 12 × 36% − debts) Budget = (price − down) × f + price × tax% ÷ 12 + insurance ÷ 12 + HOA where f = i ÷ (1 − (1 + i)^−n)
Worked example
On 100,000 a year, 28% of the monthly income is 2,333 and 36% minus 500 of other debts is 2,500, so the budget is 2,333. With 60,000 down, 6.5% over 30 years, 1.1% property tax and 1,500 of insurance, that budget buys a home of 357,530.76.
Sources
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
- Fannie Mae Selling Guide, B3-6-02: Debt-to-Income Ratios The limits lenders apply. The 28/36 rule used here is the traditional, stricter guide.
Sources checked September 29, 2026. 6 automated tests check its answers on every change.
About this calculator
Most lenders check two numbers before they approve a mortgage. Your housing costs should be no more than about 28% of your gross (before-tax) monthly income. And your housing costs plus every other debt payment should be no more than about 36%. This is the 28/36 rule, and whichever limit is lower decides your budget.
The calculator turns that budget into a price. It counts everything you pay each month for the home, not just the loan: property tax, homeowners insurance and any HOA or service charge. A higher property tax or a big HOA fee shrinks the price you can afford just as surely as a higher interest rate.
The result is an upper limit, not a target. Lenders may go higher, some to 43% or more of income, but a bigger payment leaves less room for saving, repairs and surprises. Many people aim below the limit on purpose.
In the US, a down payment under 20% usually adds mortgage insurance (PMI), which this estimate doesn’t include. Closing costs, often 2–5% of the price, come on top of the down payment. Outside the US, lenders often use income multiples or stress tests instead, so treat the result as a guide.
Questions people ask
What is the 28/36 rule?
A lender’s rule of thumb: spend at most 28% of gross monthly income on housing, and at most 36% on housing plus all other debts.
How much house can I afford on 100,000 a year?
With 60,000 down, 500 a month of other debts and a 6.5% rate over 30 years, about 357,531 including typical US property tax and insurance.
Does this include PMI?
No. With less than 20% down, add PMI in the mortgage calculator to see the full monthly payment.
Should I buy at the top of my budget?
Not necessarily. The limit is what lenders allow; a lower payment leaves room for savings, repairs and changes in income.