liminfoHousing Affordability Calculator
Free web tool: Housing Affordability Calculator
Maximum Home Price
$284,312
Max Loan Amount
$224,312
Monthly Mortgage
$1,492
Total Monthly Payment
$1,927
28% Rule Max
$1,867/mo
DTI Ratio
36.4%
About Housing Affordability Calculator
The Housing Affordability Calculator determines the maximum home price you can afford based on your financial profile, using the standard 28/36 debt-to-income (DTI) rule used by most US mortgage lenders. You enter your annual gross income, existing monthly debt obligations (car loans, student loans, credit card minimums, etc.), planned down payment, mortgage interest rate, loan term (typically 30 years), annual property tax rate, and monthly homeowner's insurance cost. The calculator applies both the front-end ratio (housing costs must not exceed 28% of gross monthly income) and the back-end ratio (total debt including housing must not exceed 36% of gross monthly income), then takes the more conservative limit to establish your maximum monthly housing payment.
Given the maximum monthly payment, the calculator works backward through the amortization formula to find the largest mortgage loan you can service, then adds your down payment to compute the maximum purchase price. The amortization calculation uses the standard formula: monthly payment = loan × [r(1+r)^n] / [(1+r)^n - 1], where r is the monthly interest rate and n is the number of payments. Property tax is incorporated by subtracting its monthly equivalent from the available housing payment before solving for the loan amount. The tool also computes the final debt-to-income ratio to confirm it stays within guidelines.
This tool is used by first-time homebuyers researching their budget before house hunting, homeowners looking to upsize or downsize, financial planners, and mortgage brokers doing quick pre-qualification estimates. All calculations are performed entirely in your browser using standard lending formulas — no income or financial data is ever transmitted to a server. The results provide a starting framework for mortgage discussions, but actual loan approval depends on credit score, employment history, and lender-specific underwriting criteria.
Key Features
- 28% front-end ratio limit (housing costs as % of gross monthly income)
- 36% back-end ratio limit (total debt including housing as % of gross monthly income)
- Amortization formula computes maximum loan from available monthly payment after tax and insurance
- Maximum home price = maximum loan amount + down payment
- Monthly mortgage payment breakdown: principal/interest, property tax, and insurance
- DTI (Debt-to-Income) ratio computed and displayed to verify guideline compliance
- Adjustable loan term (default 30 years) and interest rate for scenario comparison
- All calculations run client-side — no income or financial data leaves your browser
Frequently Asked Questions
What is the 28/36 rule for home buying?
The 28/36 rule is a standard mortgage guideline. The "28" means your monthly housing costs (mortgage principal + interest + property taxes + insurance, also called PITI) should not exceed 28% of your gross monthly income. The "36" means all your monthly debt payments combined (including housing) should not exceed 36% of gross monthly income. Lenders use the more restrictive of the two limits.
How does this calculator determine the maximum home price?
The calculator first finds your maximum monthly housing payment using the 28% and 36% limits, taking the lower value. It then subtracts the estimated monthly property tax and insurance, leaving the amount available for mortgage principal and interest. Using the amortization formula, it solves for the maximum loan at your interest rate and term, then adds the down payment to get the maximum purchase price.
What is included in the monthly housing payment calculation?
The total monthly housing payment includes: (1) mortgage principal and interest, calculated using the standard amortization formula; (2) monthly property tax, estimated as (home price × annual tax rate) / 12; and (3) monthly homeowner's insurance, which you enter directly. This total (PITI) is what is measured against the 28% front-end limit.
What is a debt-to-income (DTI) ratio?
DTI is the percentage of your gross monthly income that goes toward debt payments. The front-end DTI covers only housing costs; the back-end DTI includes all monthly debts (housing + car loans + student loans + credit card minimums + other obligations). Most conventional mortgages require back-end DTI below 36–45%, though FHA loans may allow up to 50% with compensating factors.
How does the down payment affect how much home I can afford?
A larger down payment directly increases your maximum home price because it reduces the required loan amount. If you can service a $400,000 mortgage and have $80,000 as a down payment, you can afford a $480,000 home. A larger down payment also reduces your monthly payment (less principal to finance) and may eliminate private mortgage insurance (PMI) if you put down 20% or more.
Why does the interest rate matter so much for home affordability?
Interest rate directly affects your monthly payment and therefore the loan size you can afford. At 4% interest, the monthly payment per $100,000 borrowed over 30 years is about $477. At 7%, it is $665 — a 39% increase. This means a buyer at 7% rates can afford roughly 28% less home than the same buyer at 4%, assuming the same monthly budget.
Is the 28/36 rule the same for all mortgage lenders?
The 28/36 rule is a traditional guideline, but lenders vary. FHA loans allow front-end ratios up to 31% and back-end up to 43% (or higher with strong compensating factors). VA and USDA loans do not use a front-end ratio limit and may allow back-end DTI up to 41%. Jumbo loans typically require stricter DTI limits. This calculator applies the standard conventional 28/36 rule.
Does this calculator account for private mortgage insurance (PMI)?
This calculator does not include a separate PMI input. PMI is typically required when the down payment is less than 20% of the home price and usually costs 0.5–1.5% of the loan amount per year. If your down payment is less than 20%, you should add an estimated PMI cost to the monthly insurance input to get a more accurate affordability estimate.