How Much House Can You Actually Afford?
The price a lender offers is not always the price your budget can carry. The 28/36 rule gives a quick reality check before you start house hunting.
What is the Home Affordability Calculator?
This calculator uses the common 28/36 rule: housing costs should stay within 28% of gross income, and all debts including housing within 36%. It takes the lower of those two monthly limits, works backwards through the loan formula at your rate and term to find the largest loan that payment supports, then adds your down payment to get the maximum home price.
How to use it
- Enter your annual gross income and your current monthly debt payments.
- Enter your down payment, interest rate and loan term.
- Press Calculate to see your affordable monthly payment, maximum loan and maximum price.
Worked example
Annual income 60000, monthly debts 200, down payment 20000, rate 5%, term 25 years: affordable monthly payment 1400, maximum loan about 239484.07, maximum price about 259484.07.
Why does my existing debt lower the home I can afford?
Because the 36% cap counts all your debts together. Every monthly debt payment eats into the room left for a mortgage, so two borrowers with the same income can afford very different homes. Paying down a debt first can therefore raise your affordable price more than a small pay rise would.
Frequently asked questions
What is the 28/36 rule?
It is a guideline, not a law: spend no more than 28% of gross income on housing and no more than 36% on all debts combined. Lenders may use different limits.
Does this include taxes and insurance?
No. This is a loan-only estimate, so taxes, insurance and maintenance would sit on top of the payment shown.