Find out how much house you can comfortably afford based on your income, debts, down payment and current rates.
Lenders in the US have long used two ratios to judge affordability. The front-end ratio says your housing costs (principal, interest, taxes and insurance) should not exceed 28% of gross monthly income. The back-end ratio says your total debt payments — housing plus car loans, credit cards and student loans — should stay under 36%. This calculator applies both and uses whichever gives the lower payment, which is exactly what a conservative lender would do. The affordable loan is then worked backwards from that payment using the amortisation formula, and your down payment is added to reach the home price.
Qualifying for a loan and comfortably affording it are different things. The 28/36 rule uses gross income — before taxes — and ignores childcare, retirement saving and the maintenance every home needs (budget roughly 1% of the price per year). Many financial planners suggest treating the calculator’s figure as a ceiling and shopping 10–20% below it, especially if your income could vary.
UK lenders more commonly use an income multiple — typically around 4.5 times your annual income — plus affordability stress tests. As a rough cross-check, multiply your gross income by 4.5 and compare it with the figure above; the lower of the two is the safer guide.
It is a lending guideline: spend at most 28% of gross monthly income on housing costs and at most 36% on all debt payments combined. This calculator takes the lower of the two limits.
The 28% rule technically covers principal, interest, taxes and insurance together. To be conservative, this calculator applies the full 28% to principal and interest alone — treat the result as a ceiling, not a target.
20% avoids private mortgage insurance (PMI) in the US and unlocks better rates. Less is possible with FHA loans (from 3.5% down) or UK 95% mortgages, but you will pay more each month.
Probably close — lenders use similar ratios — but they also check your credit score, employment history and the property itself. Pre-approval gives you the definitive number.
Usually not. Buying below your maximum leaves room for maintenance, rate rises and life changes. Many advisers suggest shopping 10–20% under your ceiling.
Start with the 28/36 rule: your housing costs should stay within 28% of gross monthly income, and all debts within 36%. Divide your annual salary by 12 and multiply by 0.28 — that is your maximum monthly housing payment. This calculator then converts that payment into a loan amount using current rates and adds your down payment to reach a home price. Treat the result as a ceiling, not a target: taxes, insurance, childcare and maintenance all sit outside the rule, so most advisers suggest shopping 10–20% below your maximum.
On an $80,000 salary your gross monthly income is about $6,667, so the 28% rule allows roughly $1,867 a month for housing. At 6.5% interest on a 30-year loan that supports a mortgage of about $295,000 — roughly a $369,000 home with a 20% down payment. If you carry car loans, credit cards or student debt, the 36% total-debt rule may lower the figure. Enter your own numbers above for an exact result.