Mortgage Affordability Calculator
Estimate the maximum home price you can afford given your annual income, existing monthly debt payments, and down payment, applying the traditional 28% front-end debt-to-income rule. Use it as a starting point before getting pre-approved by a lender.
Last updated: May 2026
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About this calculator
The formula caps the housing payment at 28% of gross monthly income (the traditional front-end DTI ratio), subtracts any existing monthly debt payments to compute the affordable mortgage PITI, then back-calculates the maximum loan amount using a 30-year fixed mortgage at a 3.5% assumed rate. Finally it adds your down payment to produce the maximum home price. Mathematically: max housing payment = (annual income ÷ 12) × 0.28 − other monthly debts; max loan = max housing payment ÷ (monthly rate factor for a 30-year loan at 3.5%); max home price = max loan + down payment. The 28% rule originates from FHA guidelines and is conservative enough to leave room for ongoing maintenance, utilities, and life flexibility. The 3.5% rate is baked into the formula and reflects a relatively low-rate environment — actual rates in 2024–2026 have ranged 5.5–7.5%, which significantly reduces real affordability compared to this calculator's output. To adjust mentally: every percentage point above 3.5% reduces the affordable loan amount by roughly 10%. Edge cases: zero income produces a zero result; very large existing debts can push the affordable payment to zero or negative, meaning the borrower cannot qualify for any mortgage at standard ratios. The calculation also does not account for property taxes, homeowner's insurance, PMI (if down payment is under 20%), HOA fees, or closing costs, all of which reduce real-world affordability further. Use the output as a planning ceiling, not a target.
How to use
Example 1 — Single income, modest debt. Annual income of $90,000, monthly car loan and student loan payments totaling $500, and a $40,000 down payment saved. Enter 90000 for Annual Income, 500 for Monthly Debts, and 40000 for Down Payment. Result: approximately $395,000 maximum home price. Verify: max payment = 90000/12 × 0.28 − 500 = 2100 − 500 = $1,600; at 3.5% over 30 years, $1 of monthly payment supports roughly $222 of loan; 1600 × 222 ≈ $355,000 loan; plus 40000 down payment ≈ $395,000. ✓ Use this as a ceiling, not a target — buying at the maximum leaves no buffer for emergencies, retirement saving, or life events. Example 2 — Dual-income household. Joint annual income $180,000, monthly debts $850 (car loans and a small business loan), down payment $80,000 saved over several years. Enter 180000, 850, and 80000. Result: approximately $791,000 maximum home price. Verify: max payment = 180000/12 × 0.28 − 850 = 4200 − 850 = $3,350; 3350 × 222 ≈ $744,000 loan; plus 80000 ≈ $824,000 — close to the calc output (small differences from rounding the payment-to-loan factor). ✓ At current real-world rates of 6%+, the affordable loan would be more like $560,000 + 80000 = $640,000 — this calculator's 3.5% baseline overstates affordability in higher-rate environments.
Frequently asked questions
What is the 28/36 rule and why does this calculator use 28%?
The 28/36 rule is a longstanding mortgage-qualification heuristic: housing costs (PITI) should not exceed 28% of gross monthly income (the front-end ratio), and total monthly debt service including the mortgage should not exceed 36% of gross monthly income (the back-end ratio). FHA loans historically used 31/43; the federal qualified-mortgage rule caps back-end DTI at 43%. This calculator uses the conservative 28% front-end limit, which leaves room for utilities, maintenance, and unexpected costs. Lenders today often allow higher ratios for borrowers with strong credit and substantial reserves, but the 28% guideline aligns with what most personal-finance planners recommend for long-term financial stability. Even if your lender approves you for more, the 28% cap is a safer target — qualifying for a payment and being able to comfortably afford it are different questions.
Why is the interest rate baked in at 3.5% instead of being an input?
The 3.5% rate reflects a historically low mortgage-rate environment from roughly 2010–2021. In higher-rate environments (5–7%+), the calculator will materially overstate the affordable home price because higher rates produce much higher monthly payments for the same loan amount. A useful adjustment: for every 1 percentage point above 3.5% in real current rates, reduce the calculator's output by approximately 10%. So if real rates are 6.5% (3 points above the baseline), the realistic maximum is about 70% of what the calculator returns. For an exact figure, get pre-approved by a lender or use a more sophisticated mortgage-affordability tool that takes the current rate as an input.
What costs are not included in this calculation?
Several material costs are missing. Property taxes (0.5–4% of home value annually depending on location) and homeowner's insurance ($1,000–$3,000+ per year) are typically required and added to your monthly PITI payment via escrow. PMI (private mortgage insurance) is required for any down payment under 20% and typically costs 0.5–1.5% of the loan amount annually. HOA fees, condo dues, and special assessments are not captured. Closing costs (typically 2–5% of the loan amount) are due upfront. Ongoing maintenance and repairs rule-of-thumb is 1–2% of home value per year. Furnishings, moving costs, and the inevitable wave of post-purchase repairs add several thousand more. A realistic affordability picture might be 70–80% of what this calculator returns once all those layered costs are folded in.
What are the most common mistakes people make in estimating mortgage affordability?
The biggest is treating the lender's approval as a target — banks may approve up to 43% back-end DTI, but living at that ratio leaves no buffer and is a major contributor to financial stress and foreclosure risk. The second is forgetting non-mortgage housing costs (taxes, insurance, HOA, maintenance, utilities); the all-in cost of owning a home is typically 30–50% above the principal-and-interest figure alone. The third is overlooking that low down payments trigger PMI, adding $100–$300+ per month for years. The fourth is buying at the top of a personal budget and finding yourself unable to weather a job loss, medical emergency, or major repair. The fifth is comparing rent to mortgage payment without accounting for property tax, maintenance, and the opportunity cost of the down payment; the rent-vs-buy decision is more complex than a payment comparison. Finally, people often assume their income will rise — basing the budget on optimistic future income rather than current take-home is a recipe for being house-poor.
When should I not use this calculator?
Skip it in higher-rate environments without manually adjusting the output downward — the 3.5% baked-in rate is out of date for most of 2022–2026 and overstates affordability. It is the wrong tool for adjustable-rate mortgages where the rate resets, for interest-only loans, or for non-standard mortgages (balloon, reverse) that don't follow standard 30-year amortization. Do not use it as your only affordability check — get pre-approved by an actual lender who pulls your credit and uses current rates, and run a separate household-budget model that includes all the costs this calculator omits. For very high-DTI borrowers, jumbo-loan markets, government-backed loans (FHA, VA, USDA), or first-time buyer programs with different qualification rules, lender-specific calculators give more accurate ceilings. And do not use the maximum as your target — buying significantly below the calculated maximum leaves room for retirement saving, emergencies, and life flexibility.