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 this estimate still simplifies
- PMI precision — below 20% down, the estimate uses 0.51%/yr; your credit, loan-to-value ratio, and lender quote determine the real premium.
- HOA dues — subtract the property’s actual monthly dues from the housing budget before converting it to a price.
- Maintenance — lender ratios do not reserve cash for repairs or replacements, but a household budget still must.
- Closing costs — use the Loan Estimate from a lender rather than a generic percentage.
Still deciding whether to buy at all? The rent vs. buy calculator answers the prior question with the same honesty.
Method, example, and sources
How this calculator works
The model applies a 28% gross-income housing limit and a 36% total-debt limit, uses the lower monthly budget, and solves for the home price whose 30-year principal-and-interest payment plus estimated property tax, homeowners insurance, and PMI when applicable fits that budget.
Worked example
With $100,000 annual income, $500 of monthly debt, $60,000 down, and a 6.5% rate, the tighter modeled housing budget is about $2,333 per month. Under the built-in tax, insurance, and PMI assumptions, that supports an estimated price near $338,912 and a loan near $278,912.
What the estimate leaves out
- The 28/36 ratios are planning rules, not a lender approval or a personal budget recommendation.
- The fixed tax, insurance, and PMI assumptions do not reflect a specific property, location, borrower, or quote.
- HOA dues, maintenance, utilities, closing costs, credit score, and lender-specific underwriting are excluded.
Primary sources
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?
Not necessarily. It is a planning guideline, not an approval promise. Some underwriting allows total debt above 36% when credit and reserve requirements are met, but the maximum a bank will lend and the amount you can comfortably repay remain different numbers.
How much down payment do I need?
Some conventional programs allow low down payments, but below 20% you will generally need private mortgage insurance (PMI), which shrinks the price that fits the same monthly budget. This calculator includes a 0.51% annual PMI estimate below 20%; your actual premium depends on the lender, credit, and loan-to-value ratio.
Why does the affordable price change so much with the interest rate?
The interest rate changes the payment required for every dollar borrowed. With the monthly budget held constant, a higher rate therefore supports a smaller loan and a lower home price. Re-run the estimate with the actual rates in your Loan Estimates rather than relying on a generic rule of thumb.
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.