How Much House Can I Afford?

A common rule of thumb is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs (principal, interest, property tax, insurance, and HOA — "PITI") and no more than 36% of gross monthly income on ALL debt payments combined, including housing. On a $120,000 salary ($10,000/month), that's a $2,800/month housing cap and a $3,600/month total-debt cap. This calculator applies both ratios plus your state's average property tax rate, then inverts the standard amortization formula to solve for the maximum loan — and therefore maximum home price — that fits your budget.

The 28/36 rule is a conventional-mortgage underwriting guideline, not a law. The "28" is the front-end ratio: housing costs (PITI + HOA) should not exceed 28% of gross monthly income. The "36" is the back-end ratio: total monthly debt (housing plus car loans, student loans, credit cards, etc.) should not exceed 36% of gross monthly income. Fannie Mae's Selling Guide (B3-6-02) sets 36% as the baseline maximum total DTI for manually underwritten conventional loans, though it can go higher (up to 45-50%) with strong credit and reserves or automated underwriting. FHA loans typically allow a higher 31/43 split. Whichever ratio is more restrictive for your numbers is the one that actually limits your budget — this calculator shows you which one "binds."

Property tax is part of your monthly housing payment (the "T" in PITI), and effective property tax rates vary enormously by state — from under 0.3% of home value per year in Hawaii to over 2% in New Jersey and Illinois. At the same income, a buyer in a high-property-tax state has less budget left over for principal and interest, so their maximum affordable home price is lower even though the underwriting ratios are identical. This calculator pulls each state's average effective property tax rate to reflect that.

Private mortgage insurance (PMI) is typically required on conventional loans when your down payment is less than 20% of the home price. It's usually priced around 0.5% of the loan balance per year (this calculator's default), though the actual rate depends on your credit score and loan-to-value ratio. PMI eats into your housing budget just like property tax or insurance — putting less than 20% down reduces the loan (and therefore price) you can afford at the same monthly payment cap, because part of that payment now goes to insurance instead of principal and interest.

No — they solve opposite problems. A mortgage calculator (see our /mortgage-calculator/) starts with a specific home price you're considering and tells you the monthly payment. This home affordability calculator starts with your income and debts and works backward to tell you the MAXIMUM home price your budget supports. Use this one first to set a target price range, then use the mortgage calculator to model the exact payment on a specific listing.

No. This tool models the recurring monthly PITI + PMI + HOA payment against income-based DTI ratios only. It does not account for closing costs (typically 2-5% of the loan), lender-required cash reserves, or your credit score, which all affect real-world loan approval. Treat the output as a starting budget range, not a pre-approval amount — get a formal pre-approval from a lender before house-hunting.