Afford Mortgage Calculator
Most buyers shop for a home price, but lenders think in monthly payments. This mortgage affordability calculator works the way underwriters do: it takes your income and existing debts, applies the classic 28/36 rule to find your maximum housing payment, then converts that payment into a home price at your rate, down payment, taxes, and insurance. You see exactly which rule limits you and what each dollar of the payment covers.
Quick Answer
On a $120,000 income with $500 in monthly debts and $60,000 down at 7.40% for 30 years, the 28/36 rule allows a $2,800 monthly housing payment, which supports a loan of about $312,700 and a home price near $372,700. The 28% front-end rule binds here; your debts are light enough that the 36% back-end rule never kicks in. About $143 a month of that payment is PMI, because the down payment lands just under 20%.
- Two caps, one answer. Lenders take the lower of 28% of gross income for housing and 36% of gross income minus your other debts, then convert that payment into a price.
- The binding rule matters. If the back-end rule binds, paying down a car loan can raise your home budget more than a raise would.
- Taxes and PMI shrink the loan. Every $100 of monthly tax, insurance, or PMI is $100 less of principal and interest the payment can support.
- Approval is a ceiling, not a target. The number here is the most a conventional lender would stretch to, not the price that fits a comfortable life.
- Quick Answer
- How the 28/36 rule turns income into a home price
- Why your debts often decide the number, not your income
- What a 7.40% rate does to buying power
- The costs most affordability calculators leave out
- What affordability calculators get wrong
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
How the 28/36 rule turns income into a home price
The 28/36 rule is the conventional lending industry’s standard affordability test: housing costs (principal, interest, taxes, insurance, HOA, PMI) should stay within 28% of gross monthly income, and all recurring debts including housing should stay within 36%. The CFPB’s debt-to-income explainer walks through the same two ratios lenders use at pre-approval. This calculator runs both, takes the lower payment, then solves the amortization formula backwards to find the loan that payment supports.
$120,000 a year becomes $10,000 a month, before taxes.
28% allows $2,800 for housing; 36% minus $500 debts allows $3,100.
$2,800 binds. Debts are light, so the front-end rule decides.
After tax, insurance, and PMI, the rest buys a ~$312,700 loan.
$312,700 loan plus $60,000 down: about a $372,700 home.
Because property tax and PMI are percentages of the price and loan, the calculator iterates a few times until the numbers settle. Run the exact payment on our mortgage payment calculator to double-check any scenario.
Why your debts often decide the number, not your income
Most buyers focus on the income side, but the back-end ratio is where applications quietly die. A $700 car payment at a $10,000 monthly income eats $700 of the $3,600 back-end allowance, and once debts push the back-end cap below the front-end cap, every extra dollar of debt directly cuts the home budget. Paying off a $500 monthly debt before applying can add roughly $70,000 to $80,000 of buying power at today’s rates.
Lenders can stretch beyond 36% on the back end: the Qualified Mortgage rule caps most loans at 43%, FHA loans commonly allow 31/43, and automated underwriting sometimes approves near 50%. If your ratios run hot, our loan qualify calculator shows where you stand, and our debt-to-income calculator breaks both ratios down.
What a 7.40% rate does to buying power
Freddie Mac’s weekly survey put the 30-year fixed average at 7.40% in mid-October 2026, up from 6.30% a year earlier. At that rate, with 20% down, 1.1% property tax, and $1,800 annual insurance, the 28% rule supports roughly 3 to 3.5 times your salary in home price:
| Annual income | Max housing payment | Max home price (20% down) |
|---|---|---|
| $75,000 | $1,750 | $247,843 |
| $100,000 | $2,333 | $338,202 |
| $125,000 | $2,917 | $428,562 |
| $150,000 | $3,500 | $518,921 |
| $200,000 | $4,667 | $699,640 |
Rate moves the price more than most buyers expect. On the $120,000 worked example ($500 debts, $60,000 down), a 6.40% rate supports about $400,100, while 8.40% supports only $348,500: one percentage point costs roughly $26,000 of house. That is why Freddie Mac’s rate survey is worth checking before you set a budget.
The costs most affordability calculators leave out
Simple affordability tools convert the full 28% into principal and interest, which overstates the loan. In reality, property tax, insurance, HOA, and PMI all come out of the same payment first. On the worked example, $2,800 breaks into roughly $2,165 of principal and interest, $342 of tax, $150 of insurance, and $143 of PMI. Buyers in high-tax states feel this hardest: the same house can cost hundreds more per month in Texas or New Jersey than in Colorado, purely from the tax line.
Two more costs never appear in the ratios but belong in your personal budget: maintenance (about 1% of the home’s value per year) and closing costs (2 to 5% of the price, due in cash at closing). If you want the full monthly picture including those, our house loan affordability calculator takes a different angle on the same question, and the IRS Publication 936 explains which parts of the payment are tax-deductible.
What affordability calculators get wrong
The typical affordability calculator asks for income and debts, applies one ratio, and prints a price, which hides three things that change the answer. First, it rarely shows which rule binds, so users never learn that killing a car payment beats chasing a raise. Second, it ignores PMI, tax, and insurance, overstating the loan by 10 to 20%. Third, it presents the lender’s maximum as a recommendation, when the 2026 conforming loan limit of $832,750 and a pre-approval letter say nothing about whether the payment leaves room for savings, kids, and life. This calculator shows the binding rule, nets out every payment component, and labels the result a ceiling. Before you lock a price, stress-test it with our mortgage approval odds calculator to see how lenders will read the same file.
Frequently Asked Questions
The standard affordability test in conventional lending: keep housing costs (PITI plus HOA and PMI) within 28% of gross monthly income, and keep housing plus all other recurring debts within 36%. Lenders compute both caps and lend against the lower one.
At 7.40% for 30 years with $500 in monthly debts and $60,000 down, the 28/36 rule supports about a $372,700 home ($2,800 monthly housing payment). With $85,720 down and no debts, the same salary supports roughly $413,688.
Gross income is standardized and verifiable from pay stubs and tax returns, while take-home pay varies with withholding choices, state taxes, and deductions. The 28/36 percentages were calibrated on gross income, so using net pay would understate what the ratios allow.
Yes. When the down payment is under 20% of the computed price, it adds estimated PMI at 0.55% of the loan per year, which is the typical range for a borrower with good credit. The CFPB explains how PMI works and when it can be removed.
Conventional automated underwriting commonly approves up to 45 to 50% with strong credit and reserves, FHA loans commonly allow 43 to 56.9%, and the Qualified Mortgage rule caps most loans at 43%. The 36% in this calculator is the conservative traditional benchmark, not the legal maximum.
Sharply. On the $120,000 worked example, dropping from 7.40% to 6.40% raises the affordable price from about $372,700 to $400,100; rising to 8.40% cuts it to $348,500. Each percentage point moves the price roughly $25,000 to $27,000.
No. Pre-approval reflects the lender’s risk math, not your life: it ignores childcare, retirement savings, maintenance reserves, and income stability. Many financial planners suggest targeting 20 to 25% of gross income for housing instead of the full 28%.
No. Closing costs run 2 to 5% of the purchase price and are paid in cash on top of the down payment, so budget them separately. On a $372,700 home, expect roughly $7,500 to $18,600 at the closing table.
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References
- Consumer Financial Protection Bureau. What is a debt-to-income ratio? Accessed October 18, 2026.
- Consumer Financial Protection Bureau. What is a Qualified Mortgage? Accessed October 18, 2026.
- Consumer Financial Protection Bureau. What is private mortgage insurance? Accessed October 18, 2026.
- Consumer Financial Protection Bureau. When can I remove private mortgage insurance (PMI) from my loan? Accessed October 18, 2026.
- Freddie Mac. Primary Mortgage Market Survey (PMMS). Accessed October 18, 2026.
- Federal Housing Finance Agency. FHFA Announces Conforming Loan Limit Values for 2026. Accessed October 18, 2026.
- Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction. Accessed October 18, 2026.
- U.S. Department of Housing and Urban Development. FHA Mortgage Insurance Programs. Accessed October 18, 2026.
- Board of Governors of the Federal Reserve System. Consumer Credit (G.19). Accessed October 18, 2026.
- U.S. Census Bureau. American Community Survey (ACS). Accessed October 18, 2026.