Precision Utility
Home Affordability
Calculator
Method
28/36
Rule
DTI
Find out how much house you can afford based on the 28/36 rule. Enter your annual income, monthly debts, down payment, interest rate, and loan details to see your maximum home price, mortgage amount, and monthly payment.
Your Finances
Car loans, student loans, credit cards, etc.
Maximum Home Price
$0
Max Mortgage
$0
Max Monthly Payment
$0
DTI Ratio
0.0%
Down Payment
$0
How the home affordability calculator works
This calculator uses the 28/36 rule, the most widely used guideline for determining how much house you can afford. It considers two debt-to-income thresholds to find your maximum comfortable housing payment.
The 28% rule (front-end ratio) says your total monthly housing costs — including mortgage principal and interest, property taxes, and homeowner's insurance — should not exceed 28% of your gross monthly income.
The 36% rule (back-end ratio) says your total monthly debt payments — housing costs plus all other debts like car loans, student loans, and credit card minimums — should not exceed 36% of your gross monthly income.
The calculator takes the lower of these two amounts as your maximum housing payment, subtracts estimated property taxes and insurance, and back-calculates the maximum mortgage you can support using the amortization formula. Your maximum home price is the mortgage amount plus your down payment.
The 28/36 rule explained
The 28/36 rule is a rule of thumb that most lenders follow when evaluating mortgage applications. Here is how it breaks down:
| Rule | What It Covers | Max % of Gross Income |
|---|---|---|
| Front-end (28%) | Mortgage + taxes + insurance | 28% |
| Back-end (36%) | All housing costs + all other debts | 36% |
For example, if you earn $85,000 per year ($7,083/month), the 28% rule limits your housing payment to $1,983/month, and the 36% rule limits your total debt to $2,550/month. If you have $500/month in existing debts, the 36% rule limits housing to $2,050/month. In this case, the 28% rule ($1,983) is the binding constraint.
What you need to know
This calculator provides an estimate based on the 28/36 rule. Your actual approval amount may differ based on your credit score, employment history, assets, and the specific lender's guidelines. Some lenders allow DTI ratios as high as 43% or even 50% for borrowers with strong credit profiles.
Remember that the maximum amount you can borrow is not necessarily the amount you should borrow. Consider your lifestyle, savings goals, emergency fund, home maintenance costs (typically 1-2% of home value per year), and future financial plans when deciding on a budget.
Property tax rates vary significantly by location — from as low as 0.28% in Hawaii to over 2.2% in New Jersey. Check your local county assessor's website for accurate rates in your target area.
Frequently asked questions
What is the 28/36 rule for home affordability?
The 28/36 rule says your monthly housing costs should not exceed 28% of your gross monthly income (front-end ratio), and your total monthly debts should not exceed 36% (back-end ratio). Lenders use both ratios to determine how much mortgage you can handle.
What is the difference between FHA and conventional loans?
FHA loans are government-backed and allow down payments as low as 3.5% with credit scores of 580+. Conventional loans typically require 3-5% down and a 620+ credit score. FHA loans carry mortgage insurance for the life of the loan, while conventional loans let you drop PMI at 20% equity.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required on conventional loans when you put down less than 20%. It typically costs 0.5-1.5% of the loan amount per year. You can request removal at 80% loan-to-value and it automatically cancels at 78%.
How much should I put down on a house?
While 20% is ideal to avoid PMI, the national median is around 13%. First-time buyers often put down 3-6%. A larger down payment means lower monthly payments, less interest over the loan's life, and potentially better rates.
What is mortgage pre-approval and why does it matter?
Pre-approval is when a lender reviews your finances and issues a letter stating how much they will lend you. It strengthens your offer with sellers and helps you set a realistic budget. Pre-approval letters are typically valid for 60-90 days.
What is a debt-to-income ratio and why is it important?
Your DTI ratio is the percentage of your gross monthly income that goes to debt payments. Lenders look at front-end DTI (housing only) and back-end DTI (all debts). Most conventional lenders prefer a back-end DTI of 36% or lower, though some allow up to 43-50% with compensating factors.