Mortgage Affordability Calculator
Estimate the maximum home purchase price you can afford based on your income, debts, and down payment. Useful when starting your home-buying search.
About this calculator
Lenders commonly use the 28% front-end rule: your monthly housing payment should not exceed 28% of your gross monthly income. This calculator derives the maximum affordable loan payment as: Max Payment = (Annual Income / 12 × 0.28) − Monthly Debts. It then converts that payment into a loan amount using the present value of an annuity formula for a 30-year mortgage at a 3.5% annual rate (r = 0.035/12 per month, n = 360 payments): Loan Amount = Max Payment / [r / (1 − (1 + r)^−360)]. Finally, the affordable home price equals Loan Amount + Down Payment. This gives a conservative upper bound; your actual approval may differ based on credit score, lender policies, and full debt-to-income review.
How to use
Assume an annual income of $80,000, monthly debts of $300, and a $20,000 down payment. Step 1 — Max monthly payment: ($80,000 / 12) × 0.28 − $300 = $1,866.67 − $300 = $1,566.67. Step 2 — Monthly rate: 0.035 / 12 = 0.002917. Step 3 — Loan amount: $1,566.67 / [0.002917 / (1 − (1.002917)^−360)] ≈ $1,566.67 / 0.004490 ≈ $348,924. Step 4 — Affordable price: $348,924 + $20,000 = $368,924. You can afford a home priced at roughly $369,000.
Frequently asked questions
How much house can I afford on a $80,000 salary?
Using the 28% rule, your maximum monthly housing payment would be about $1,867. After subtracting existing monthly debts, the remainder is what a lender would allow for principal, interest, taxes, and insurance combined. With no existing debts and a $20,000 down payment, you could afford a home in the range of $370,000–$390,000 at current rates. Keep in mind that property taxes and homeowner's insurance reduce the amount available for the mortgage itself.
What is the 28% rule for mortgage affordability?
The 28% rule is a longstanding lending guideline stating that your total monthly housing cost — including mortgage principal, interest, property taxes, and insurance — should not exceed 28% of your gross monthly income. It is the front-end component of the broader 28/36 rule, which also caps total debt payments at 36% of income. Lenders use this ratio to assess whether a borrower can comfortably handle monthly obligations without financial strain. Staying within these thresholds improves your odds of loan approval and reduces financial stress.
Why do monthly debts reduce how much mortgage I can qualify for?
Lenders evaluate your total debt burden, not just your proposed housing payment. If you already carry car loans, student loans, or credit card minimums, those payments consume part of the income share lenders are willing to commit to debt repayment. In this calculator, existing monthly debts are subtracted from your maximum allowable housing payment, directly shrinking the loan amount you can support. Reducing or eliminating existing debts before applying for a mortgage is one of the most effective ways to increase your buying power.