Budget first, house second
House hunting works better in reverse: fix the monthly amount your life can absorb, convert it into a price, and only then open the listings. This calculator applies the 28/36 rule to your income and existing debts, takes the tighter of the two limits as your housing budget, subtracts property tax and insurance, and solves for the price where a 30-year mortgage payment plus those costs exactly fills the budget.
Note which limit binds you (shown under the budget figure). If it’s the 36% total-debt line, existing debts are what’s shrinking your house — paying off a $400/month car loan could add tens of thousands to your affordable price. Run the numbers in our debt payoff calculator before assuming you need a bigger income.
What’s deliberately not in this number
- PMI — if you put down less than 20%, insurance on the loan trims your budget; treat the result as a ceiling.
- HOA dues — condos and some neighborhoods add $100–$600+/month; subtract them from your budget before converting to price.
- Maintenance — the 1%-of-value-per-year rule of thumb isn’t in any lender ratio, but it’s real money your budget must leave room for.
- Closing costs — 2–5% of the price in cash, on top of the down payment.
Still deciding whether to buy at all? The rent vs. buy calculator answers the prior question with the same honesty.
Frequently asked questions
What is the 28/36 rule?
The classic lender guideline: housing costs (mortgage payment, property tax, insurance) should stay under 28% of gross monthly income, and total debt payments (housing plus car loans, student loans, credit card minimums) under 36%. Your budget is whichever of the two limits binds first — this calculator applies both and takes the lower.
Is the 28/36 rule what lenders actually approve?
Lenders often approve more — up to 43–50% debt-to-income on some loans. That’s precisely the trap: the maximum a bank will lend and the amount you can comfortably repay are different numbers. Being approved at 45% DTI leaves little room for maintenance, childcare, or a rate shock at renewal of any other debt.
How much down payment do I need?
Conventional loans allow as little as 3–5% down, FHA 3.5% — but below 20% you’ll pay private mortgage insurance (PMI), typically 0.3–1.5% of the loan per year, which shrinks the price you can afford at the same monthly budget. 20% down avoids PMI entirely; this calculator assumes no PMI, so treat results with a small down payment as slightly optimistic.
Why does the affordable price change so much with the interest rate?
Because most of an early mortgage payment is interest, your budget buys principal at the margin. Rule of thumb: each 1% of rate change moves your affordable price by roughly 10%. It’s why buyers who fixate on a price target rather than a monthly budget get surprised when rates move.
Should I include bonuses or a partner’s income?
Include a partner’s stable income if they’ll be on the loan. Be cautious with variable pay: lenders typically average two years of bonuses/commissions, and building your budget on income that might not repeat is how houses become stressful. A conservative approach: qualify on base pay, treat variable pay as acceleration.