Mortgage Affordability Calculator
Calculate how much house you can afford based on your income using the 28/36 DTI rule
Calculate how much house you can afford based on your income and debts. Our free calculator uses the industry-standard 28/36 rule to determine your maximum home price and monthly payment. See detailed PITI breakdowns and understand your debt-to-income ratio instantly.
Your Financial Information
Monthly: $6,250
US average: 1.2%
Quick Scenarios:
Maximum Affordable Home Price
$253,103
Based on 20% down payment ($50,620.6)
Max Housing Payment
$1,750
28% of income
Max Total Debt
$2,250
36% of income
Your DTI Ratio
36.0%
Moderate Risk
Monthly PITI Payment
$1,750.22
Principal, Interest, Tax, Insurance
Debt-to-Income Ratio
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0-36%
Healthy
36-43%
Moderate
43%+
High Risk
Monthly Payment Breakdown (PITI)
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Income vs Affordability
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This chart shows your monthly income compared to recommended debt limits and your actual debt load.
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100% Client-Side Calculations: All calculations are performed locally in your browser. We do not collect, store, or transmit any of your financial data to our servers. Your information stays completely private and secure on your device. This calculator works offline once loaded.
Important Disclaimer
Not Financial Advice: This calculator provides estimates for educational and informational purposes only.
- Results are based on the information you provide
- Actual results may vary based on individual circumstances
- Consult a qualified professional before making financial decisions
Understanding Mortgage Affordability
📊 The 28/36 Rule Explained
The 28/36 rule is the industry standard that lenders use to determine how much house you can afford. It's based on two key ratios that protect both you and the lender from overextending financially.
28% Housing Ratio
Your monthly housing expenses (PITI) should not exceed 28% of your gross monthly income.
Example with $5,000/month income:
$5,000 × 0.28 = $1,400
Maximum housing payment
36% Debt Ratio
Your total monthly debt payments (housing + car loans + credit cards + student loans) should not exceed 36% of your gross monthly income.
Example with $5,000/month income:
$5,000 × 0.36 = $1,800
Maximum total debt payments
Important: If you have $500 in existing monthly debts, you'd have $1,300 available for housing ($1,800 - $500), but it can't exceed the 28% limit of $1,400. The calculator automatically uses the lower of these two amounts to keep you within safe borrowing limits.
🏠 What is PITI?
PITI stands for the four components of your total monthly housing payment. Understanding each part helps you see where your money goes every month.
Principal
The portion of your payment that goes toward paying down the loan balance. This builds your home equity over time.
Interest
The cost of borrowing money from the lender. This portion doesn't build equity - it's the lender's profit. Early in your loan, most of your payment is interest.
Taxes
Property taxes owed to your local government. These vary by location (typically 0.5% to 2.5% of home value annually) and are usually paid through an escrow account managed by your lender.
Insurance
Homeowners insurance protects your property from damage. If you put down less than 20%, you'll also pay PMI (Private Mortgage Insurance) until you reach 20% equity.
💡 How to Increase Your Home Buying Power
Increase Your Income
- •Ask for a raise or promotion at work
- •Take on a side hustle or freelance work
- •Include bonuses and commission if consistent
- •Consider dual-income households (co-borrower)
Reduce Your Debts
- •Pay off credit cards and high-interest loans
- •Consider paying off your car before buying a home
- •Avoid taking on new debt before applying
- •Refinance student loans to lower monthly payments
Improve Your Loan Terms
- •Improve your credit score (aim for 740+)
- •Shop around for better interest rates
- •Consider paying points to lower your rate
- •Time your purchase when rates are favorable
Save for a Larger Down Payment
- •20% down avoids PMI and lowers monthly payments
- •Larger down payment = smaller loan amount
- •Research first-time buyer assistance programs
- •Consider gift funds from family members
Frequently Asked Questions
What is the 28/36 rule for mortgage qualification?
The 28/36 rule is a guideline that lenders use to determine how much mortgage you can afford. The "28" means your housing expenses (PITI) should not exceed 28% of your gross monthly income. The "36" means your total debt payments (including housing, car loans, credit cards, student loans) should not exceed 36% of your gross monthly income. This calculator uses both rules to determine your maximum affordable home price.
What is debt-to-income (DTI) ratio and why does it matter?
Your DTI ratio is the percentage of your monthly gross income that goes toward debt payments. For example, if you earn $5,000/month and pay $1,500 in total debts, your DTI is 30%. Lenders use DTI to assess your ability to manage monthly payments. A DTI below 36% is considered healthy, 36-43% is moderate risk, and above 43% is high risk. Most conventional loans require DTI under 43%, though some programs allow up to 50%.
How much down payment do I need?
The traditional standard is 20% down to avoid PMI (Private Mortgage Insurance) and secure the best rates. However, many loan programs allow less: FHA loans require as little as 3.5% down, conventional loans can go as low as 3%, and VA loans offer 0% down for qualifying veterans. Keep in mind that smaller down payments mean larger loan amounts, higher monthly payments, and often PMI, which increases your monthly housing costs by $100-200 or more.
What debts are included in the 36% debt ratio?
All recurring monthly debt obligations count toward the 36% limit: your new mortgage payment (PITI), car loans, student loans, credit card minimum payments, personal loans, child support, and alimony. However, utilities, groceries, gas, and other living expenses are NOT counted. If a debt will be paid off within 10 months, some lenders may exclude it from the calculation.
How do property taxes affect how much I can afford?
Property taxes are included in your monthly housing payment (the "T" in PITI) and vary significantly by location, typically ranging from 0.5% to 2.5% of home value annually. High property tax areas (like New Jersey at ~2.4% or Texas at ~1.7%) reduce your buying power because more of your monthly payment goes to taxes instead of the home itself. The calculator accounts for this by including property taxes in the monthly PITI calculation when determining your max home price.
Should I max out my budget or buy below my means?
Financial experts generally recommend buying below your maximum approved amount to leave room for unexpected expenses, home maintenance, and lifestyle flexibility. The 28/36 rule determines what lenders will approve, but it doesn't account for your personal financial goals, irregular income, or other priorities like retirement savings. A good strategy is to calculate your max affordability, then aim for 75-85% of that amount to maintain financial flexibility and peace of mind.
What interest rate should I use in the calculator?
Check current mortgage rates online or get pre-approved by a lender to know your specific rate. As of early 2024, 30-year fixed rates range from 6.5% to 7.5% depending on credit score, down payment, and market conditions. Your rate depends on your credit score (740+ gets best rates), down payment size (20%+ avoids PMI and lowers rates), loan type (conventional, FHA, VA), and whether you pay points upfront. Even a 0.5% rate difference significantly impacts your buying power - a 7% rate vs. 6.5% could cost you $30,000+ in home price affordability.
What other costs should I budget for when buying a home?
Beyond your monthly PITI payment, budget for: closing costs (2-5% of purchase price), moving expenses, furniture and appliances, home inspection ($300-500), appraisal ($400-600), HOA fees if applicable, ongoing maintenance (budget 1-2% of home value annually), utilities (often higher than renting), and an emergency fund for unexpected repairs like a broken HVAC or roof leak. Don't forget ongoing costs like lawn care, pest control, and upgrades you'll want to make.
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