Free Home Affordability Calculator
Calculate how much house you can afford using the 28/36 rule. Enter income, debts, and down payment to find your max home price instantly.
Max Home Price
$363,785
Max Monthly Payment
$1,983
Estimated Loan Amount
$313,785
Down Payment
$50,000 (13.7%)
Formula
28/36 Rule: Max housing ≤ 28% of gross monthly income; total debt ≤ 36%. Max loan derived from payment using standard amortization.How Much House Can You Afford?
This calculator uses the industry-standard 28/36 rule to determine the maximum home price you can afford. It considers your income, existing debts, down payment, interest rate, and loan term to give you a realistic budget for your home search.
How the 28/36 Rule Works
The 28% rule limits your monthly housing payment (principal + interest + taxes + insurance) to 28% of your gross monthly income. The 36% rule limits your total monthly debt payments (housing + car loans + student loans + credit cards) to 36% of gross income. Your maximum payment is the lower of these two limits.
What Affects Your Home Affordability?
Income is the biggest factor — higher income means a higher budget. Existing debts reduce your available budget through the 36% rule. Down payment directly increases your purchasing power — every dollar of down payment is a dollar of home price that doesn't need financing. Interest rates dramatically affect affordability — a 1% rate increase reduces your buying power by roughly 10%.
Steps to Buying Your First Home
- Check your credit score — aim for 740+ for the best rates, minimum 620 for conventional loans
- Save for a down payment — 20% avoids PMI, but 3-10% is possible with certain loan programs
- Get pre-approved — shows sellers you're serious and locks in your rate for 60-90 days
- Budget for closing costs — typically 2-5% of the home price, due at closing
- Don't forget the hidden costs — maintenance, repairs, and furnishing a new home add up quickly
When Renting Makes More Sense
If you plan to move within 3-5 years, renting is often cheaper than buying when you factor in closing costs, maintenance, and transaction fees. Use the price-to-rent ratio in your area: if the home price divided by annual rent is above 20, renting may be the better financial move.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule is a guideline used by lenders: your monthly housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. If your existing debts are high, the 36% limit may reduce your home budget more than the 28% limit.
How much do I need for a down payment?
Conventional loans require 3-20% down. Putting down 20% avoids Private Mortgage Insurance (PMI), which costs 0.5-1% of the loan annually. FHA loans allow as little as 3.5% down. VA and USDA loans offer 0% down for eligible buyers. A larger down payment means a smaller loan and lower monthly payments.
What costs besides the mortgage should I plan for?
Budget for property taxes (1-2% of home value/year), homeowner's insurance ($1,000-3,000/year), PMI if applicable, HOA dues ($200-500/month in some areas), maintenance (1% of home value/year), and utilities. These can add $500-1,500/month beyond your mortgage payment.
Does my credit score affect how much I can afford?
Absolutely. A higher credit score (740+) gets you lower interest rates, which means lower monthly payments and a higher affordable home price. The difference between a 6% and 7% rate on a $300,000 loan is about $200/month — or roughly $72,000 over 30 years.
Should I buy the most expensive home I can afford?
No. The 28/36 rule shows the maximum, not the target. Buying below your max gives you breathing room for savings, investments, emergencies, and lifestyle. Many financial advisors suggest keeping housing costs at 20-25% of income for a more comfortable budget.