Mortgage Affordability Calculator

How to Use This Calculator

• 1.Enter your annual gross income (before taxes).
• 2.Add your total monthly debt payments (car loans, student loans, credit card minimums).
• 3.Enter the down payment you have saved or plan to save.
• 4.Adjust the interest rate and loan term to match current market conditions.

The Formula

This calculator uses the 28/36 rule, a standard guideline used by most lenders:

The calculator takes the lower of these two limits to determine your maximum affordable monthly payment, then uses the standard amortization formula to convert that into a loan amount.

Example Calculation

Suppose you earn $75,000/year, have $500/month in existing debts, and have saved $50,000 for a down payment with a 6.5% interest rate on a 30-year loan:

• Monthly gross income: $6,250
• 28% front-end limit: $1,750/month
• 36% back-end limit minus debts: $2,250 - $500 = $1,750/month
• Maximum mortgage payment: $1,750/month
• Maximum loan at 6.5% for 30 years: ~$277,000
• Plus down payment: ~$327,000 max home price

Why This Matters

Knowing how much house you can afford before you start shopping saves time and prevents heartbreak. It also gives you leverage when negotiating with lenders, since you'll know whether a pre-approval offer is reasonable or if you're being stretched too thin.

Remember that the 28/36 rule is a guideline, not a hard limit. Some lenders allow higher ratios, especially for borrowers with excellent credit. However, staying within these limits gives you a comfortable buffer for unexpected expenses, maintenance, and other costs of homeownership.

Frequently Asked Questions