Home Affordability Calculator
Updated · By the CalculatorDash editorial team · How we check our maths
Quick answer
Lenders commonly cap housing costs at 28% of gross monthly income and all debt payments at 36%. On a $120,000 salary with $600 of other monthly debts, $60,000 down and a 6.5% 30-year rate, that points to a home price of about $425,000.
How this calculator works
Most lenders judge affordability with two ratios. The front-end ratio caps housing costs (mortgage principal and interest, property tax, insurance and HOA fees) at about 28% of gross monthly income. The back-end ratio caps all debt payments, housing included, at about 36%. Some loan programmes allow higher limits.
This calculator finds the monthly housing budget allowed by the tighter of the two limits, then works backwards to the home price whose mortgage payment plus property costs fits that budget, given your down payment and rate.
Being approved for a loan is not the same as being comfortable with the payment. Leave room for maintenance, savings and the things you enjoy, especially if your income varies.
The formula
- Housing budget
- the lower of (income ÷ 12 × 28%) and (income ÷ 12 × 36% − other debts)
- Payment factor
- f = r × (1 + r)^n ÷ ((1 + r)^n − 1), the payment per dollar borrowed
- Price
- (budget + down payment × f) ÷ (f + annual property cost % ÷ 12)
Worked example
A $120,000 income is $10,000 a month. 28% is $2,800 and 36% minus $600 of debts is $3,000, so the budget is $2,800. At 6.5% over 30 years with property costs of 1.4% a year, the price that fits is about $424,600, which means a loan of about $364,600 with $60,000 down.
Tips
- 01Get pre-approved before house hunting so you know the lender's real limit.
- 02Paying off a car loan before applying can raise your budget more than a raise would.
- 03Remember closing costs, moving and furnishing; don't put every dollar of savings into the down payment.
Frequently asked questions
What is the 28/36 rule?
A guideline that housing costs should be no more than 28% of gross monthly income and total debt payments no more than 36%.
How much house can I afford on a $100,000 salary?
With modest debts, a 20% down payment and rates around 6–7%, often somewhere around $330,000–$380,000, depending heavily on property taxes and insurance in your area. Enter your own numbers above.
Does the calculator include PMI?
No. If you put down less than 20% on a conventional loan, add PMI to the property cost percentage or use the mortgage calculator for the exact payment.
Should I use gross or take-home pay?
Lenders use gross (pre-tax) income, so this calculator does too. For your own budget, check the payment against take-home pay as well.