Before you fall in love with a listing, it helps to know the honest ceiling on what you can borrow. This affordability calculator works backward from your income, existing debts, and down payment to estimate the maximum home price a lender is likely to approve — and, just as importantly, the price that leaves you comfortable rather than house-poor.
How lenders decide what you can afford
Most lenders lean on the 28/36 rule. The front-end ratio says your total monthly housing cost should stay under 28% of your gross monthly income. The back-end ratio says all your monthly debt payments combined — housing plus car loans, student loans, and credit card minimums — should stay under 36%. This calculator applies both limits and shows the more conservative of the two.
Why your debts matter so much
Every $200 car payment or $300 student loan bill reduces the mortgage payment you can qualify for dollar for dollar within that 36% ceiling. That is why paying down or paying off a small loan before applying can meaningfully raise your buying power, sometimes more than saving a larger down payment would.
A worked example
Imagine you earn $90,000 a year ($7,500 a month) with $500 in monthly debt payments. The 28% front-end limit allows about $2,100 for housing; the 36% back-end limit allows $2,700 total, minus your $500 in debts, leaving $2,200 for housing. The lender uses the lower figure, roughly $2,100. After taxes and insurance, that supports a loan around $270,000–$300,000 depending on your rate and down payment.
Smart ways to use this number
- Treat the maximum as a ceiling, not a target — borrowing less leaves room for emergencies and life changes.
- A larger down payment lowers your loan amount and can push you below the PMI threshold, freeing up monthly cash.
- Get pre-approved before shopping so sellers take your offer seriously and you know your real budget.
- Remember the calculator cannot see your lifestyle — factor in childcare, travel, and savings goals before maxing out.
What the 28/36 rule allows at different incomes
Most conventional lenders start with two ratios. The front-end ratio caps total housing costs (principal, interest, taxes, insurance, and HOA) at about 28% of gross monthly income. The back-end ratio caps housing plus all other monthly debt payments at about 36%, though many loan programs stretch higher for strong borrowers. Here is what those limits look like in dollars:
| Gross income | Max housing (28%) | Max total debt (36%) | Approx. loan at 6.5%* |
|---|---|---|---|
| $60,000 | $1,400/mo | $1,800/mo | $177,000 |
| $90,000 | $2,100/mo | $2,700/mo | $266,000 |
| $120,000 | $2,800/mo | $3,600/mo | $354,000 |
| $150,000 | $3,500/mo | $4,500/mo | $443,000 |
Notice how quickly other debts eat into the number. A household earning $90,000 with a $450 car payment and $250 in student loans already uses $700 of its $2,700 back-end allowance, which leaves $2,000 for housing instead of $2,100. Paying off a car loan before applying can raise your buying power by tens of thousands of dollars.
Why the lender’s maximum is not your budget
A pre-approval tells you the most a lender is willing to risk, not what fits your life. Lenders do not see your childcare costs, retirement savings rate, travel plans, or the fact that your income may be irregular. Many financial planners suggest aiming for a housing payment closer to 25% of gross income, or about a third of take-home pay, so that saving for retirement and emergencies stays realistic.
Your down payment matters too. Putting less than 20% down on a conventional loan usually triggers private mortgage insurance, which often runs roughly 0.3% to 1.5% of the loan per year depending on credit score and down payment. On a $300,000 loan that can mean an extra $75 to $375 a month until you reach 20% equity. FHA loans allow smaller down payments but carry their own mortgage insurance premiums.
Ways to afford more without stretching
- Improve your credit score. A higher score can lower both your rate and your PMI cost.
- Pay down or pay off revolving and installment debt before you apply to free up back-end room.
- Shop property taxes. Two similar homes in neighboring towns can differ by hundreds of dollars a month in tax alone.
- Budget for closing costs, typically 2–5% of the purchase price, so they do not come out of your down payment.