How Much House Can You Afford?
Affordability comes down to one question: how much of your monthly income can safely go toward housing? Two benchmarks answer it — one based on housing costs alone, and one based on all your debts combined.
- Front-end ratio: Your monthly housing payment (principal, interest, taxes, insurance) as a percentage of gross monthly income. Most guidelines suggest keeping this at or below 28%.
- Back-end ratio (DTI): All monthly debt payments — housing plus car loans, student loans, and credit card minimums — as a percentage of gross monthly income. Conventional loans can go as high as 50% through Fannie Mae's automated underwriting, though many lenders prefer less.
This calculator applies both constraints and shows you home prices at three budgets: conservative (28/36 rule), moderate (40% back-end DTI), and stretch (43% back-end DTI). Use the conservative number as your target. A lender may approve more than the stretch figure, which is a reason to decide your own ceiling first.
The 28/36 Rule Explained
The 28/36 rule is a household name in personal finance and mortgage lending. Here's how it works in practice:
| Income | Max Housing (28%) | Max Total Debt (36%) |
|---|---|---|
| $60,000/yr ($5,000/mo) | $1,400/mo | $1,800/mo |
| $80,000/yr ($6,667/mo) | $1,867/mo | $2,400/mo |
| $100,000/yr ($8,333/mo) | $2,333/mo | $3,000/mo |
| $150,000/yr ($12,500/mo) | $3,500/mo | $4,500/mo |
If you carry $500/month in other debts (car, student loans), the 36% back-end rule leaves $2,500 for housing ($3,000 − $500 in other debts). But the 28% front-end cap of $2,333 is more restrictive — so $2,333 is the effective ceiling under the full 28/36 rule. Both constraints apply, and lenders check both.
What This Calculator Includes
The monthly payment this calculator uses includes all components of PITI:
- Principal & Interest: The core mortgage payment, calculated based on loan amount, rate, and term.
- Property taxes: Estimated from your property tax rate and the computed home price.
- Homeowner's insurance: Your estimated annual premium, spread monthly.
- PMI: If your down payment is less than 20%, private mortgage insurance is added at ~0.85% of the loan annually. You can ask to cancel it once the balance reaches 80% of the home's original value, and it ends automatically at 78%.
- HOA fees: Monthly homeowner's association dues, if applicable.
How Down Payment Affects Affordability
A larger down payment helps in two ways. First, it directly reduces your loan amount, which lowers the monthly P&I payment — allowing the same income to support a higher home price. Second, once you reach 20% down, PMI is eliminated entirely, freeing up additional monthly budget.
On a $400,000 home at 7%, the difference between 5% down ($20,000) and 20% down ($80,000) is roughly $399/month less in P&I plus $269/month in eliminated PMI — about $668/month total. At the same income, that freed-up budget meaningfully increases the home price you can qualify for.
What Lenders Actually Look At
This calculator models the DTI rules most lenders use, but approval also depends on factors not captured here:
- Credit score: On conventional loans, the best pricing generally goes to scores of 780 or higher, and 620 is the usual minimum.
- Reserves: Lenders often require 2–6 months of mortgage payments in savings after closing.
- Loan type: FHA loans allow higher DTI (up to 57% in some cases) and lower down payments (3.5%), but they carry mortgage insurance that lasts 11 years with at least 10% down and the life of the loan with less.
- Employment history: Two years of stable employment in the same field is a common benchmark.
Getting pre-approved by a lender is the only way to know exactly what you qualify for. Use this calculator as a planning tool to understand your budget before starting that conversation.
Frequently Asked Questions
How much house can I afford on my salary?
A common guideline is to keep your monthly housing costs (PITI — principal, interest, taxes, and insurance) at or below 28% of your gross monthly income. On an $80,000 salary, that's about $1,867/month for housing. Your actual buying power also depends on your down payment, existing debts, credit score, and current mortgage rates.
What is the 28/36 rule?
The 28/36 rule is a classic personal finance guideline: monthly housing costs (mortgage, taxes, insurance) should not exceed 28% of gross monthly income, and total monthly debt payments (housing + car loans + student loans + credit cards) should not exceed 36%. Many lenders use these ratios as underwriting benchmarks.
What is DTI ratio in a mortgage?
DTI (debt-to-income ratio) is the percentage of your gross monthly income that goes toward monthly debt payments. Lenders calculate two numbers: front-end DTI (housing costs ÷ income) and back-end DTI (all debts ÷ income). For conventional loans, Fannie Mae allows a back-end DTI up to 45% on manually underwritten loans and up to 50% through its automated underwriting, with the higher limits depending on credit, reserves, and down payment. Many lenders prefer lower, and some add their own tighter limits. FHA can go higher with compensating factors.
Does this calculator include property taxes and insurance?
Yes. This calculator uses your full PITI payment — principal, interest, property taxes, and homeowner's insurance — when applying DTI ratios. It also factors in PMI if your down payment is less than 20%, and HOA fees if applicable.
How does my down payment affect how much house I can afford?
A larger down payment reduces your loan amount, lowering your monthly P&I payment. Putting down 20% or more also avoids PMI, which often costs roughly 0.5–1.5% of the loan amount a year. Both effects increase the maximum home price you can qualify for within the same monthly budget.
Is 43% DTI too high?
43% used to be the debt-to-income limit for a qualified mortgage, but that limit was replaced in 2021, and Fannie Mae now allows up to 50% through its automated underwriting. Being approved at 43% or more still leaves little room for emergencies, job changes, or unexpected expenses. The 36% guideline exists for good reason — it keeps housing from crowding out everything else in your budget.
Should I use my gross or net income?
Lenders always calculate DTI using gross income (before taxes). This calculator uses gross income as well. Take-home pay is noticeably lower: on $100,000, a single filer takes home about $6,600 a month in Texas and $6,100 in California in 2026, before any retirement or health deductions. Make sure the housing payment is genuinely manageable on your actual take-home, not just within the gross-income DTI guidelines.
What if I can't put 20% down?
Many buyers put down less than 20%. The National Association of Realtors' 2025 profile of buyers found a median down payment of 10% for first-time buyers and 23% for repeat buyers. Options with less than 20% include conventional loans (as low as 3% down with PMI) and FHA loans (3.5% down with mortgage insurance). Both require PMI or MIP, adding cost until you build equity. This calculator estimates PMI at 0.85% of the loan annually, which is a reasonable average for conventional loans.