How Much House Can I Afford?
FinanceEnter your income, monthly debts, down payment and loan terms. You get the home price that fits the common 28/36 debt-to-income rules, the loan amount, the monthly payment and how the price moves with the rate.
Step by step
$2,333.33 a month for housing gives a home up to $338,068
- Gross monthly income: $100,000 divided by 12 is $8,333.33.
- Housing limit: 28% of that is $2,333.33. Debt limit: 36% of that, less your $500 of other debts, is $2,500.00. The lower amount, $2,333.33, is your monthly housing budget.
- The home price is the highest one at which principal and interest at 6.5% over 30 years, property tax of 1.1%, insurance, HOA dues and mortgage insurance together fit within that budget. They add up to the budget, except when the price is capped where your down payment is 20% of it: a higher price would add mortgage insurance and go over the budget.
- Result: a home up to $338,068 with a $278,068 loan. The monthly cost is $2,333.33, which is 28.0% of your income and 34.0% with your other debts.
Once every entry is valid, you’ll see each step of the calculation here.
Formula
- B
- monthly housing budget, the lower of the housing limit and the total debt limit
- f, d
- maximum housing ratio and maximum total debt ratio, as decimals (0.28 and 0.36)
- I, D
- gross annual income and other monthly debt payments
- L, P
- loan amount and home price; the loan is the price minus the down payment
- j, n
- monthly interest rate (yearly rate / 12) and number of monthly payments
- t, S, H
- yearly property tax rate, yearly insurance premium and monthly HOA dues
- m
- yearly mortgage insurance rate, charged only when the down payment is below 20% of the price
How it works
How much house can you afford? Lenders answer with two ratios of your gross monthly income. The housing ratio compares the whole housing payment (principal, interest, property tax, insurance, mortgage insurance and HOA dues) with your income. The total debt ratio adds your other monthly debt payments. The common guideline is 28/36: housing at or below 28% and all debts at or below 36%. The FDIC describes front-end ratios of 25% to 28% and back-end ratios of 33% or 36%, and HUD lists 31% and 43% as the standard FHA ratios. Fannie Mae allows a total of 36% on manually underwritten loans, up to 45% with strong credit and reserves, and 50% through its automated system. Change the two ratio fields to test any of these.
The calculator turns the lower of the two limits into a monthly housing budget, then solves for the highest home price whose full monthly cost fits within it. That cost equals the budget, except in one case that the Formula section describes. With $100,000 of income, $500 in other monthly debts, $60,000 down, a 6.5% rate over 30 years, 1.1% property tax and $1,800 of insurance, the budget is $2,333.33 and the home price comes out at $338,068. Because the down payment is below 20% of that price, mortgage insurance is part of the cost. Property tax grows with the price, which is why the price cannot be found by dividing the budget by a payment factor alone.
Treat the result as a range to explore, not as a verdict. It is not a pre-approval, and lenders also review credit history, income stability, cash reserves and the property. A payment at the ratio limit can still feel tight, so compare it with your real budget. A different rate changes the answer a lot, and the table under the result shows five nearby rates. Mortgage insurance here means conventional private mortgage insurance; FHA, VA and USDA loans have their own premiums and fees, which this calculator leaves out. To see what a given loan costs month by month, use the loan calculator.
The formula
The first line sets the budget: 28% of $8,333.33 a month is $2,333.33, and 36% of it less $500 of other debts is $2,500, so the lower housing limit applies. The second line is the standard payment formula for a fixed-rate loan, the same one used in the loan calculator. The third line says the budget must cover principal and interest, property tax, insurance, HOA dues and mortgage insurance. It is solved for the price P in closed form.
Mortgage insurance switches on when the loan exceeds 80% of the price, so the cost jumps at a 20% down payment. If the 20% down price costs less than the budget but any higher price with mortgage insurance costs more, the answer is exactly the 20% down price, and its monthly cost stays below the budget. Rates are fixed for the whole term, and taxes, insurance and HOA dues are held constant. Nothing is rounded until the result is shown.
Example
What home price fits a $100,000 income with $60,000 down?
- Monthly income is $8,333.33. The housing limit is $2,333.33 and the debt limit, after $500 of other debts, is $2,500.00. The lower one, $2,333.33, is the budget.
- At the best price, property tax is $309.90 a month, insurance $150.00 and mortgage insurance $115.86. Principal and interest on the $278,068 loan is $1,757.58.
- Together that is $2,333.33 a month, equal to the budget, so the price is $338,068. The down payment is 17.7% of it.
With $100,000 a year and $500 in other monthly debts, the housing ratio of 28% is your tighter limit. You can afford a home up to $338,068, with a $278,068 loan, for $2,333.33 a month.
Load this example into the calculatorFrequently asked questions
What house can I afford on $50,000?
With $50,000 a year, $10,000 down, no other debts, a 6.5% rate over 30 years, 1.1% property tax and $1,800 of insurance, the 28/36 rule points to a home near $141,600, a loan of about $131,600 and roughly $1,167 a month including mortgage insurance. More down payment or a lower rate raises the price; other debts lower it.
What is the 3-3-3 rule for buying a house?
It is an informal rule of thumb, not a lender rule, and sources define it differently. One common version, also written 30/30/3, keeps housing costs under 30% of gross income, holds cash worth about 30% of the price, and caps the price at three times your gross income. On $100,000 of income that points to about $300,000, which you can compare with the result above.
How much will I pay in monthly mortgage payments for a $400,000 loan for 30 years?
Principal and interest on a $400,000 loan over 30 years is about $2,398 a month at 6%, $2,528 at 6.5% and $2,661 at 7%. Property tax, homeowners insurance and any mortgage insurance come on top, so the full housing payment is higher.
Can I afford a $300k house on a $100k salary?
On the numbers, often yes. With $60,000 down (20%), a 6.5% rate over 30 years, 1.1% property tax and $1,800 of insurance, the payment is about $1,942 a month: 23.3% of gross income, or 29.3% with $500 of other debts, inside 28/36. With only $15,000 down, mortgage insurance lifts it to about $2,345, or 28.1% of income, just over the 28% guideline.
What counts toward total monthly debt?
Lenders add up the minimum monthly payments on car loans, student loans, credit cards and personal loans, plus court-ordered support, and then the new housing payment. Utilities, groceries, phone bills and insurance premiums are normally left out. The CFPB defines debt-to-income as all monthly debt payments divided by gross monthly income.
Does my credit score change how much house I can afford?
Yes, mostly through the rate and the cost of mortgage insurance. A good credit score generally earns a lower rate, which raises the price you can afford, and a weak one can mean a higher rate or a higher down payment. Each lender and loan program sets its own score minimums, so ask what applies to you before you buy a home.
Does this calculator tell me if I am eligible for a loan?
No. It estimates a price range from the ratios you choose. Whether you are eligible depends on a lender reviewing your credit, income, employment, savings and the property. Treat the result as a starting point and get a pre-approval from a lender, or talk to a housing counselor, before you make an offer.
What is the 28/36 rule?
It says your total housing payment should be at most 28% of gross monthly income and all debt payments, housing included, at most 36%. It is a guideline from lending practice, and programs differ: HUD lists 31% and 43% as the standard ratios for manually underwritten FHA loans. This calculator lets you change both percentages.
- What is a debt-to-income ratio? (Consumer Financial Protection Bureau)
- Loans and Mortgages: How Much Mortgage Can I Afford? (Federal Deposit Insurance Corporation (Money Smart))
- Mortgagee Letter 2014-02: qualifying ratios for manually underwritten FHA loans (U.S. Department of Housing and Urban Development)
- B3-6-02: Debt-to-Income Ratios (Fannie Mae Selling Guide)
- What is private mortgage insurance? (Consumer Financial Protection Bureau)