What is the 28/36 rule for mortgages?

The 28/36 rule is a traditional lender guideline: your front-end DTI (housing costs ÷ gross income) should not exceed 28%, and your back-end DTI (all debt payments ÷ gross income) should not exceed 36%. For example, on a $100K salary, housing costs should stay under $2,333/month and total debt payments under $3,000/month. Many lenders now use more lenient limits — FHA allows up to 31/43, and some conventional lenders go to 45%+ for borrowers with strong credit.

What is PMI and when do I have to pay it?

Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20% of the home price. PMI protects the lender if you default. The cost is typically 0.5%–1.5% of the loan amount per year, added to your monthly payment. PMI is automatically canceled once your loan balance reaches 80% of the original home value (based on the amortization schedule). You can also request cancellation early if your home has appreciated.

How does the calculator determine my maximum home price?

The calculator uses an iterative solver that runs 8 times to account for the circular dependency between home price, property tax, and PMI. Each iteration: (1) calculates the maximum total monthly payment from your DTI limits, (2) subtracts estimated tax, insurance, HOA, and PMI to find the available principal-and-interest budget, (3) reverse-solves for the maximum loan amount, and (4) adds your down payment. The process converges to within $100 in under 8 iterations.

Should I use the conservative, moderate, or aggressive DTI preset?

Conservative (28/36) is safest: you will have more cash flow for savings, repairs, and emergencies. Most financial planners recommend staying at or below this threshold. Moderate (30/40) is the most common lender standard for conventional loans and gives you a realistic maximum. Aggressive (33/43) represents the stretch limit for FHA and some conventional lenders — you will qualify for a higher loan but have less financial cushion. Use the scenario cards to see the dollar difference between all three.

Does co-borrower income help significantly?

Yes — adding a co-borrower's income directly increases your maximum home price in proportion to how income-constrained your budget is. If you are front-end DTI constrained (i.e., your income is the binding factor, not your debts), every additional dollar of income translates to roughly $3–4 more in home-buying power at current 30-year rates. Co-borrowers also share liability, so both credit profiles are evaluated by lenders.

How Much House Can I Afford?

Calculate your maximum home price based on income, debts, and down payment using lender DTI guidelines.

Last updated: April 2026

Income

Annual Income

$20K$1.0M

Monthly Debts

$0$5,000

Down Payment

Amount ($)

$0$500K

Percent (%)

050

warningPMI applies — put 20% down to eliminate it

DTI Guideline

Front 30% / Back 40%

You can afford up to

—

$2,500/month total payment

Constrained by front-end DTI

Budget Range

Conservative → Aggressive

$321K$342K$372K

Debt-to-Income Ratios

Front-end DTI (housing)

Back-end DTI (all debts)

Monthly Payment Breakdown

Principal & Interest

$1,849

Property Tax

$313

Insurance

$150

PMI

$188

Scenario Comparison

Ways to Increase Your Budget

savings

Adding $10K to your down payment could increase your budget by $38K.

+$38K

trending_down

A 0.5% lower rate could expand your budget by $12K.

+$12K

info

You're paying $188/mo in PMI. Reaching 20% down eliminates this cost.

Know your target home price?

arrow_forwardSee full amortization schedule

Disclaimer: These estimates are for educational purposes only. Actual loan qualification depends on your credit score, lender guidelines, and local market conditions. Consult a licensed mortgage professional before making any financial decisions.

What it does

Real-time affordability calculation

Maximum home price and monthly breakdown update instantly as you adjust any input.

Iterative PMI solver

Handles the circular dependency between home price, loan amount, and PMI in 8 iterations for accurate results.

Three DTI scenario presets

Compare Conservative, Moderate, and Aggressive lender guidelines side by side in the scenario cards.

Down payment bidirectional linking

Edit the dollar amount or percentage — the other field updates automatically based on your estimated home price.

Actionable insights

See exactly how much budget you gain by adding $10K down, paying off $200/mo in debt, or securing a lower rate.

State-specific pre-fill

Navigate from any US state page and the calculator pre-fills local property tax and insurance rates.

How to use How Much House Can I Afford?

1
Enter your annual income
Type or slide your gross annual income. Add a co-borrower income if you are applying jointly — this increases the total qualifying income and your maximum loan amount.
2
Add your monthly debts
Include car payments, student loan minimums, credit card minimums, and other recurring debt obligations. Do not include utilities, groceries, or the future mortgage payment. Higher debts reduce your back-end DTI headroom.
3
Set your down payment
Enter a dollar amount or percentage. Putting 20% or more down eliminates PMI and reduces your monthly payment. The tool links the dollar and percentage fields so changing one updates the other.
4
Choose a DTI guideline
Conservative (28/36), Moderate (30/40), and Aggressive (33/43) presets reflect different lender standards. Most conventional lenders use 28/36; FHA loans allow up to 31/43; some lenders go higher with strong compensating factors.
5
Adjust interest rate and costs
Open Advanced Settings to change the interest rate, loan term, property tax rate, insurance, and HOA. The calculator pre-fills state-specific rates when you navigate from a state page.

How much house can I afford on my salary?

The short answer is approximately 3–4× your annual gross income, assuming a 20% down payment and moderate debts. At 6.875% on a 30-year mortgage, the $100K salary benchmark translates to roughly $381K (Moderate DTI). But this figure is highly sensitive to your existing debt load — adding $500/month in car and student loan payments can reduce your budget by $40K–$60K.

The most reliable approach is to work backwards from lender DTI limits. Calculate 30% of your gross monthly income (front-end limit), subtract property tax, insurance, HOA, and any PMI, and the remainder is your maximum principal-and-interest payment. Then reverse-solve for the loan amount using the standard mortgage formula.

Why the down payment percentage matters more than the dollar amount

At exactly 20% down, two things happen: PMI disappears (saving $100–$300/month on most loans), and your LTV drops to 80%, which often qualifies you for better interest rates. The PMI elimination alone can add $15K–$40K to your maximum home price at constant monthly payment.

For first-time buyers with limited savings, the FHA loan (3.5% down) provides access to homeownership earlier, but at the cost of both upfront and annual mortgage insurance premiums. Run both scenarios in the calculator — sometimes renting an additional year to reach 20% down results in a meaningfully better financial outcome.

Property taxes and insurance: the hidden budget killers

Many affordability calculators ignore property taxes and insurance, leading buyers to dramatically underestimate their true housing cost. In high-tax states like New Jersey (2.49%) or Illinois (2.23%), property taxes alone can add $500–$800/month on a $350K home — consuming a significant portion of your monthly payment budget.

This calculator accounts for all PITI components (Principal, Interest, Taxes, Insurance) plus HOA and PMI. The pre-filled rates on state pages use current Tax Foundation and ValuePenguin data, but your specific county and neighborhood may differ. Always verify the actual property tax bill before making an offer.

Frequently Asked Questions

What is the 28/36 rule for mortgages?: The 28/36 rule is a traditional lender guideline: your front-end DTI (housing costs ÷ gross income) should not exceed 28%, and your back-end DTI (all debt payments ÷ gross income) should not exceed 36%. For example, on a $100K salary, housing costs should stay under $2,333/month and total debt payments under $3,000/month. Many lenders now use more lenient limits — FHA allows up to 31/43, and some conventional lenders go to 45%+ for borrowers with strong credit.
What is PMI and when do I have to pay it?: Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20% of the home price. PMI protects the lender if you default. The cost is typically 0.5%–1.5% of the loan amount per year, added to your monthly payment. PMI is automatically canceled once your loan balance reaches 80% of the original home value (based on the amortization schedule). You can also request cancellation early if your home has appreciated.
How does the calculator determine my maximum home price?: The calculator uses an iterative solver that runs 8 times to account for the circular dependency between home price, property tax, and PMI. Each iteration: (1) calculates the maximum total monthly payment from your DTI limits, (2) subtracts estimated tax, insurance, HOA, and PMI to find the available principal-and-interest budget, (3) reverse-solves for the maximum loan amount, and (4) adds your down payment. The process converges to within $100 in under 8 iterations.
Should I use the conservative, moderate, or aggressive DTI preset?: Conservative (28/36) is safest: you will have more cash flow for savings, repairs, and emergencies. Most financial planners recommend staying at or below this threshold. Moderate (30/40) is the most common lender standard for conventional loans and gives you a realistic maximum. Aggressive (33/43) represents the stretch limit for FHA and some conventional lenders — you will qualify for a higher loan but have less financial cushion. Use the scenario cards to see the dollar difference between all three.
Does co-borrower income help significantly?: Yes — adding a co-borrower's income directly increases your maximum home price in proportion to how income-constrained your budget is. If you are front-end DTI constrained (i.e., your income is the binding factor, not your debts), every additional dollar of income translates to roughly $3–4 more in home-buying power at current 30-year rates. Co-borrowers also share liability, so both credit profiles are evaluated by lenders.

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