Home Affordability Calculator

The 28/36 Rule

Most lenders follow the 28/36 rule: your monthly housing costs (mortgage, property taxes, insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments (housing + car + student loans + credit cards) should not exceed 36%. This calculator uses these thresholds to estimate the maximum home price you can afford.

For example, if your household earns $8,000/month gross, your maximum housing payment should be $2,240 (28%), and your total debt payments should stay below $2,880 (36%). If you already pay $640/month in non-housing debt, your maximum mortgage payment drops to $2,240 — and the home price you can afford depends on your interest rate and down payment.

What Lenders Actually Look At

Beyond the 28/36 rule, lenders evaluate your credit score (determines your interest rate), your down payment (affects your loan-to-value ratio and whether you need PMI), your employment history (2+ years of stable income preferred), and your cash reserves (3-6 months of payments in savings). FHA loans allow down payments as low as 3.5% with a 580+ credit score, while conventional loans typically require 5-20% down.

Hidden Costs Most Buyers Forget

Your mortgage payment is not your total housing cost. Add property taxes (1-2% of home value annually), homeowner's insurance ($1,500-3,000/year), PMI if you put less than 20% down (0.5-1% of loan value/year), HOA fees ($200-500/month in some areas), and maintenance (budget 1% of home value per year). A $350,000 home with a $1,800 mortgage payment actually costs $2,500-3,000/month all-in.