Find out exactly how much house you can afford using the same 28/36 DTI rules mortgage lenders use — including PMI, taxes, insurance, and HOA in your monthly payment.
Lenders use two key ratios when qualifying you for a mortgage: the 28% front-end rule (total housing payment should not exceed 28% of gross monthly income) and the 36% back-end rule (all debt including housing should not exceed 36%). This calculator applies both rules and shows you the maximum home you qualify for, plus the full monthly payment breakdown at that price.
Mortgage lenders use two debt-to-income ratios to determine how much you can borrow. Both must be satisfied for loan approval:
In practice, many lenders approve loans up to 43% back-end DTI for conventional mortgages and up to 50% for FHA loans. However, borrowing at the maximum limit is risky — it leaves little room for job loss, medical bills, or other financial shocks. Financial planners typically recommend staying closer to the 28/36 guidelines for long-term financial health.
If your down payment is less than 20% of the purchase price, lenders require Private Mortgage Insurance (PMI). PMI typically costs 0.5–1.5% of the loan amount annually, added to your monthly payment. It can be removed once you reach 20% equity (via paydown or appreciation) by requesting cancellation from your lender. This calculator uses 0.75% annually as a default PMI estimate for down payments under 20%.
This calculator shows the maximum qualifying price. A conservative target is typically 10–15% below the maximum — giving you a buffer for repairs, maintenance, job changes, and unexpected costs. The general rule of thumb for maintenance is 1% of home value per year ($3,500 on a $350,000 home), which is not included in the PITI payment but must come from your budget.
Your credit score significantly affects your mortgage rate, which in turn affects how much you can afford. A 760+ score typically gets the best rates. Scores below 620 may not qualify for conventional financing at all. Each 0.5% increase in rate reduces your maximum loan amount by roughly 5–6%.
At $70,000/year ($5,833/month gross), the 28% rule gives a max PITI of $1,633/month. With a 6.75% rate, 30-year term, 20% down, and average taxes/insurance, this translates to roughly a $200,000–$230,000 home price depending on your location's tax rate.
The 28/36 rule states that your housing payment should not exceed 28% of gross income (front-end), and all debts combined should not exceed 36% of gross income (back-end). It's the traditional conservative underwriting standard used by many conventional lenders, though actual approval limits can be higher.
A $400,000 home with 20% down ($80,000), 6.75% rate, and 1.2% property taxes requires roughly a $2,500–$2,800/month PITI payment. By the 28% rule, that requires a gross income of about $107,000–$120,000/year. With debts factored in via the 36% rule, the required income may be higher.
Yes. If your down payment is less than 20% of the calculated home price, this calculator adds an estimated PMI cost of 0.75% of the loan amount annually to your monthly payment. PMI is typically removed once you have 20% equity.
Not necessarily. Lenders approve based on ability to repay the loan — they don't account for your other life goals, retirement savings, childcare costs, or the lifestyle you want to maintain. Many financial advisors recommend buying at 80–90% of your maximum qualifying price to maintain financial flexibility.